VIENNA, 18 May 2021 - The United Nations Industrial Development Organization (UNIDO) believes that the COVID-19 pandemic brings an opportunity to glean lessons and present feasible solutions to improve the governance of global manufacturing in the face of this and future crises. Opening a virtual high-level expert consultation, “Manufacturing responses to COVID-19: Lessons for governance and policy coordination in the face of global disasters”, UNIDO Director General, LI Yong, said, “This is a chance not be missed.”
The consultation with the 12 eminent experts on economic development is part of UNIDO’s ongoing research work for the Industrial Development Report 2022, entitled The Future of Industrialization in a Post-Pandemic World. The 12 experts are Professors Luciano Coutinho, Xiaolan Fu, Justin Yifu Lin, Carlos Lopes, Mariana Mazzucato, Célestin Monga, José Antonio Ocampo, Izumi Ohno, Jeffrey Sachs, Kunal Sen, Luc Soete and Joseph E. Stiglitz.
The consultation revolved around three themes: (i) What role for multilateralism and international policy coordination in supporting industrial recovery? (ii) How can global industrial production systems become more inclusive, sustainable and resilient? and (iii) How to design and implement post-pandemic industrial policies? More detailed questions were subsequently proposed during an open and frank discussion.
Regarding the role of multilateralism and international policy coordination in supporting industrial recovery, one key concern highlighted by the experts is to ensure that a recovery from the pandemic leaves no one behind. On this, Professor Stiglitz indicated that “the challenge of multilateralism and international coordination in ensuring that no one is left behind in this recovery centres on three issues: access to vaccines and medicines and enhancing the capacity of producing those in the South; access to finance sources to support recovery (…), and finally debt relief”.
Professor Lopes further stressed the importance of enhanced instruments to deal with the provision of global public goods, noting, “The supply of global public goods may be considered the ultimate proof of interconnectedness and international solidarity, [ …] but it has a direct bearing of the quality and production of wealth at the national level.”
Another key concern was that environmental sustainability should be placed at the centre of the recovery efforts. As Professor Sachs put it, “We need to reach climate neutrality by 2050. The agenda for decarbonization is clear and the roadmap is not complicated: no more investments in fossil fuels, no new explorations and developments anywhere, because no new investments in hydrocarbons will be profitable in a decarbonizing world.”
There was agreement on the importance of ensuring developing countries can access the technologies they need to undertake the required green industrial transformation. On this, Professor Soete commented that “green industrial technologies should be considered in a similar way to the health essential goods for the COVID-19 pandemic, as essential technologies for addressing climate crisis.”
On the issue of the restructuring of global industrial production systems, the experts concurred on the challenges of making such systems more inclusive, sustainable and resilient. They advocated strategies to enable developing countries to identify and seize new windows of opportunity to foster industrial development emerging from local, regional and global market dynamics.
The experts highlighted the importance of strengthening production capacities and improving support for small manufacturing firms. The challenges involved were also recognized, for example, in bridging the global digital and production divides. There was agreement that increasing and improving investments in digital infrastructure and capabilities is key to industrializing developing countries.
According to Professor Fu, "The pandemic has accelerated this global trend of digitalization and demonstrated how digitalization can enable a sustainable and resilient post-pandemic recovery. However, these new windows of opportunity are highly reliant in the countries’ digital infrastructure and competencies".
Professor Sachs called for cooperation in this regard, saying, “We need a dramatic and massive scale up of investments in developing countries in green, digital, and education. These spheres are fundamental for industrial development.”
In his brief summary of the discussion around the topic of designing post-pandemic industrial policies, Hiroshi Kuniyoshi, UNIDO’s Deputy to the Director General, stressed the importance of the state in dealing with crises and fostering long-term development. This was supported by the experts who emphasized the need to nurture state capacities to anticipate and address emergencies.
Professor Mazzucato warned that the COVID-19 pandemic “is a massive wake-up call for the dynamic capabilities within public sector institutions that require investments within that”, whereas Professor Lin highlighted an additional value of industrialization, saying “Since when the emergency of a crisis is going to occur is not predictable, the best way to prepare is to achieve dynamic, inclusive and a sustainable development in the post-pandemic period”.
Beyond generating decent jobs and incomes, the fruits of dynamic growth would mean governments are in a stronger fiscal position to act, both in normal times but also when a crisis hits, Lin explained.
Participants also stressed the need for policy interventions that help to address the immediate challenges created by COVID-19, including the pertinence of boosting production capacities in the area of health.
“It is not enough to have a vaccine if then we are not able (and don’t have the capacity) to roll it out, as well as to actually manufacture it” said Mazzucato. She advocated for the adoption of outcomes-oriented industrial strategies, instead of sector specific ones, by which different sectors get to interact to deliver on issues around health, carbon neutrality, future mobility, and so on.
At the same time, the experts stressed that efforts are necessary to foster industrialization as a process of structural transformation. Professor Ocampo mentioned that “the most important task (…) is to reconstruct the capacity to do production sector policies, [meaning] not only manufacturing capacity but also the capacity to integrate productively the natural resource sectors”.
Selected recommendations advanced at this High-Level Consultation will inform the production of a call for action to be included in the 2022 edition of UNIDO’s flagship publication, the Industrial Development Report. Through a continuous engagement with participants at the consultation and with other renowned international experts and specialized entities, UNIDO expects to contribute to international debates around concrete proposals that can bring the world closer to a better future through inclusive and sustainable industrial development.
For more information, please contact:
Research and Industrial Policy Officer, UNIDO