Intergovernmental negotiations for the post-2015 development agenda are still ongoing in the run up to its adoption at the United Nations Summit in September. Despite this fact, there seems to be an overarching consensus that poverty eradication is imperative and that it can only be achieved through sustainable development, an area where UNIDO has a significant role to play.
Industrialization is a structural and transformative driver of development. Industrialization creates employment, improves productivity and generates wealth; it thereby eradicates poverty and addresses other social goals and targets. But in order to do so, industrialization must be inclusive and sustainable. This is the rationale behind the Lima Declaration adopted by UNIDO’s Member States in 2013. The Declaration accorded UNIDO its new mandate of Inclusive and Sustainable Industrial Development, or ISID.
When environmental safeguards and social inclusiveness criteria are properly taken into account, as mandated by ISID, industry proves to be the most dynamic driver of prosperity and collective well-being. By ensuring that the benefits of industrialization are shared by all, that the living conditions of all are sustainably improved, and that no one is left behind, ISID can play a central role in the eradication of poverty as enounced in Goal 1 of the proposed Sustainable Development Goals, or SDGs.
UNIDO's goal of achieving ISID is explicitly recognized in the new development agenda, and specifically in the proposed SDG-9, “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”. UNIDO’s long-standing knowledge and expertise in supporting countries in their sustainable industrialization efforts make the Organization a leading agency for both the implementation of this goal and for the monitoring of its progress.
Goal 9 acknowledges that industry and industrialization are the main drivers of sustained economic growth. This is based on the recognition that modern livelihoods have generally been built on, and further developed by, industrialization efforts. Industrial development is therefore a global objective that touches upon the economic, social and environmental aspirations of all and, as such, is intrinsically woven into the proposed architecture of the post-2015 development agenda.
Though we await the final agreement of the Summit in New York this September, we should already begin to align UNIDO’s delivery with what constitutes the post-2015 development agenda. UNIDO’s contribution will be most visibly recognized in the progress nations make toward SDG-9.The linkages that industrialization creates, both within the sector and between sectors, results in a multiplying effect that touches on many aspects of economic development and further contributes to the achievement of the post-2015 development agenda in its entirety.
Our generation could be the first to eradicate poverty from the planet. But we also have to bear in mind that ours is likely to be the last generation with the chance to save the environment.
When adopting the Lima Declaration in December 2013, the 172 member states of UNIDO called on the Organization to promote a path of industrialization that contributes to economic growth while ensuring a fair distribution of its benefits, and preserving our ecological heritage for the generations to come—Inclusive and Sustainable Industrial Development, or ISID for short, was born.
It is now widely accepted that industrialization is an effective vehicle for economic progress. Middle-income countries and emerging economies are reaping the dividends of manufacturing production in terms of jobs, income, foreign earnings, food security and resilience building. The African Union, which comprises the majority of the world’s least developed countries, identified industrialization as one of the key elements of its Agenda 2063. The United Nations General Assembly this September is also expected to formally recognize the role of industrialization for development.
Sustainability, for its part, was at the core of the 1992 Earth Summit, also known as the Rio Conference. Industry must respect the ecosystem in which it is embedded; it must use resources responsibly whether those resources are water, energy, or materials. A manufacturing sector in expansion must harness technology to reduce its ecological footprint, minimize the emission of greenhouse gases and ozone-depleting substances, or the release of toxic chemicals. It must be safe—for its workers, for the surrounding communities and for the global village.
But making industrialization inclusive is probably the greatest challenge of all: whether within or across countries, the expected phenomenon of convergence is slow to appear, if at all. The world is sharply polarized between the “haves” and the “have-nots”, and the uneven distribution of benefits of growth breeds tension, occasional friction, desperate migration, and overall global insecurity. Can industrial production contribute to more inclusive growth? It can, and it must.
UNIDO, through its technical assistance operations in over a hundred countries, is uniquely positioned to carry out the ambitious aspirations of ISID. Experts in energy, environment, trade facilitation, investment and technology, or rural entrepreneurship combine their practical experience to deliver key solutions on the ground. They interact on a daily basis with enterprises, large and small, local or export-oriented to build human resources and institutional capabilities where it matters most, in low-income countries. They create and execute new programmes to ensure a path of industrialization that is safe, fair and responsible.
Yet, they cannot act alone. Technical assistance by itself may trigger a momentum towards ISID, but feeding it calls for broader resources. Industry needs roads and utilities; it needs infrastructure and capital investment; it needs modern technology and market access. In an increasingly complex constellation of actors, strategies and means of intervention, UNIDO must play a critical role in helping local authorities coordinate resource flows. It must weave partnerships and facilitate the alignment of corporate business plans, investment strategies and public policies towards shared ISID objectives.
To demonstrate the validity of the concept—the power of partnerships—UNIDO works alongside governments in the design and execution of ambitious Programmes for Country Partnership (PCPs). Tangible benefits are continuously being monitored and will be reported on this new website. Stay tuned!
All low-income countries have the potential for dynamic economic growth. We know this because we have seen it happen repeatedly: a poor, agrarian economy transforms itself into a middle- or even high-income economy in one or two generations. The key is to capture the window of opportunity for industrialization arising from the relocation of light manufacturing from higher-income countries. That was true in the nineteenth and twentieth centuries, and it remains true today.
Japan seized its opportunity in the years following World War II, using labor-intensive industries, such as textiles and simple electronics, to drive its economy until rising labor costs eroded its comparative advantage in those sectors. That shift then allowed other low-income Asian economies – South Korea, Taiwan, Hong Kong, Singapore, and to a large extent Malaysia and Thailand as well– to follow in Japan's footsteps.
China, of course, is the region's most recent traveler along this well-trodden path. After more than three decades of breakneck economic growth, it has transformed itself from one of the poorest countries on earth to the world's largest economy. And now that China, too, is beginning to lose its comparative advantage in labor-intensive industries, other developing countries, including those in Africa, are set to take its place. Indeed, ever since the Industrial Revolution, the rise of light manufacturing has driven a dramatic rise in national income. The United Kingdom's economic transformation started with textiles. In Belgium, France, Sweden, Denmark, Italy, and Switzerland, light manufacturing led the way. Similarly, in the United States, cities like Boston, Baltimore, and Philadelphia became centers for producing textiles, garments, and shoes.
Until recently, few believed that Africa, too, could become a center for modern manufacturing. But, with the right policies, there is no reason why African countries could not follow a similar trajectory.
Consider land-locked Ethiopia, which only ten years ago seemed to be an especially bad bet. But then the country built an industrial park near Addis Ababa and invited the Chinese shoemaker Huajian to open a factory there. Huajian opened its doors in January 2012 with two production lines and some 600 workers. By the end of the year, it had employed 2,000 Ethiopians and doubled the country's exports of leather shoes. Today, the company has 3,500 workers in Ethiopia producing more than two million shoes a year.
In 2013, spurred by Huajian's success, the Ethiopian government created a new industrial park, with space for 22 factory units. Within three months, all of them had been leased by export-oriented companies in garments and shoes from Turkey, Korea, China, Bangladesh and elsewhere.
A carefully focused export strategy is crucial for developing countries to capture the opportunity. They must use their limited resources in the most effective way to improve infrastructure and business environment pragmatically in special economic zones or industrial parks. With the right growth strategy, far-reaching change can come within a person's lifetime – sometimes more than once. My native Taiwan is now a high-income economy. But when I was born there, in 1952, the post-colonial island was poorer than almost every country in Africa.
Then it happened to me again. I moved to mainland China in 1979, when the country's per capita income was less than one-third of Sub-Saharan Africa's. Today, China has become an upper-middle-income country, and it is on track to become a high-income country by 2020.
UNIDO’s inclusive and sustainable industrial development (ISID) is a right approach to help its member states achieving industrialization, poverty reduction and prosperity.
Prime Minister Desalegn,
Prime Minister Dionne,
Ladies and Gentlemen,
Colleagues and friends,
It is my great pleasure to welcome you today in Vienna as we convene for the Second of two UNIDO Global Forums on inclusive and sustainable industrial development. In short: ISID. The promotion of Inclusive and Sustainable Industrial Development is a very clear mandate given by our Member States at the General Conference of UNIDO in Lima, Peru last December.
We have since been implementing the ISID mandate in various ways. A few months ago in June, we convened here in Vienna the first ISID Forum, which was aimed primarily at Government officials and key policy-makers to provide them with an opportunity to exchange views on policies and instruments towards ISID, and to offer concrete testimonies of what has worked in one country and could inspire another.
Today we launch the second ISID Forum with a strong statement: technical assistance cannot remain isolated from the main forces that shape the course of progress in our countries. We need to combine our efforts to enhance the developmental impact of our endeavours. Together we will grow; the partnership will make us stronger. I see representatives of government, bilateral and multilateral development partners, sister agencies of the United Nations System, the private sector, NGOs and academia. As we all assemble here in Vienna for the next two days, we will collectively discuss and advance UNIDO’s new partnership approach to technical cooperation in realising UNIDO’s ISID mandate. Thank you all for coming here today!
I am honoured that you-- participants from across the globe, from a variety of fields and institutions -- have accepted my invitation to come here today. To advance our commitment we will focus during these two days on two concrete applications of country partnerships, in Ethiopia and in Senegal. Therefore I am especially honoured to welcome the Prime Minister of Ethiopia, H.E. Mr. Hailemariam Desalegn, and the Prime Minister of Senegal, H.E. Mr. Mahammed Dionne. Excellencies, your presence here today clearly demonstrates the importance that governments attach to sustainable and industrial development.
I am also delighted to be able to welcome Mr. Ban Ki-moon, the Secretary-General of United Nations to this Forum. Mr. Ban Ki-moon was with us during our general conference in December 2013 when our Member States unanimously adopted the Lima Declaration, which gave UNIDO a new mandate to promote inclusive and sustainable industrial development. Mr. Ban Ki-moon, I trust you will see that we have made a lot of progress in less than a year.
Honourable guests, excellencies, ladies and gentlemen,
The diversity of participants this morning represents what might be called "multi-stakeholder attendance". This "multi-stakeholder attendance" confirms both the relevance and the interest in our new partnership approach. I hope that over the next days, we will be able to develop from this "multi-stakeholder attendance" to "multi-stakeholder partnerships" between trusted partners, as we seek to scale-up investment for industrial development.
Industrialisation is certainly one of these complex challenges. For industrialisation to take off,a number of things must happen at more or less the same time. Policies should be supportive,business environment must be reasonable conducive, capital should be created, technical and managerial skills should be strong, infrastructure should be put in place, trade logistics should be available and in the end, prices should be competitive, preferably in the world market, but at the very least, in the domestic market. As you can tell, industrialisation is not a one man show. It requires many actors, each contributing in its own distinctive way.
The focus of our forum will be the new pilot partnership programmes for inclusive and sustainable industrial development in Ethiopia and Senegal. We have taken the current situation in both countries into account, and we have identified a number of strong partners in both. Based on what we have learned, we have designed two programmes for country partnerships. We will provide a platform to present our contribution, as well as the contributions of our partners, to support Ethiopia and Senegal's industrialisation.
The main thrust behind the proposed partnership approach and its business model is the mobilisation of partners and their resources to synergise with UNIDO’s technical cooperation--all with the aim of helping accelerate the recipient countries’ inclusive and sustainable industrial development.
Honourable guests, excellencies, ladies and gentlemen,
I would say that these two pilot programmes for country partnership mark the beginning of a larger, more comprehensive and more ambitious approach of how UNIDO undertakes technical cooperation with and for Member States to support their industrialisation agendas. Together with our partners, we will finalise the planning of the partnership country programmes, based on the inputs we receive in this Forum.
Initiating and coordinating the implementation of the partnership programmes will be a challenge. We count on the Governments of Ethiopia and Senegal to lead this process, to coordinate all partners, and to drive the process. UNIDO is fully committed to supporting the Governments of Ethiopia and Senegal in implementing the two pilot programmes.
Honourable guests, excellencies, ladies and gentlemen,
We have been working in a global development setting defined by the Millennium Development Goals for the last fifteen years. The MDGs have led to great achievements in poverty reduction, but large populations are still struggling for real change. If we want to achieve the necessary scale of development, we have to explore the full potential of inclusive and sustainable industrial development. We have to strengthen productive capacities. We have to build enterprises and industries.
We have to reach out to farmers and entrepreneurs who are eager to change their lives and we have to promote economic diversification and structural transformation based on adding value to the natural resources of these countries that are committed to become middle-income countries in the next decades.
Therefore I say: we must work together, we must take advantage of the strength of all partners and we must work cleverly. We must make the most of the limited resources at our disposal. I strongly believe that the benefit of the partnership approach will increase both the impact of the resources Member States have placed with trust in our Organization as well as the impact of the interventions of our partners. And furthermore, lots of business opportunities will be created for the private sector.
This forum presents a transformative opportunity. Together we can achieve industrial and sustainable development for all. I wish the forum many fruitful discussions and great success.