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Industrial Development Board of UNIDO
Executive Summary

1. Assessment of the situation: In the past decades, rapid industrialization has lifted hundreds of millions of people out of poverty, by providing them with jobs and an income. Yet progress has been uneven and many remain stuck in a poverty trap, particularly in areas where industrialization levels remain low or have stagnated. This highlights how inclusive and sustainable industrial development is key to poverty reduction efforts and to ensure that “no one is left behind” by 2030. The achievement of inclusive and sustainable industrialization (SDG 9) enables sustained economic growth, the creation of decent jobs and income (SDG 8); it helps reduce poverty (SDG 1), hunger (SDG 2) and inequalities (SDG 5 and 10), while improving health and well-being (SDG 3), increasing resource and energy efficiency (SDGs 6, 7, 11, 12) and reducing greenhouse gas and other polluting emissions, including from chemicals (SDG 13, 14, 15). UNIDO, as the only entity of the United Nations mandated to promote inclusive and sustainable industrial development, has extensive knowledge and technical experience in these areas. The Organization realizes its mandate by designing and implementing industrial policies, enhancing local productive capacities and entrepreneurship, contributing to job creation, advancing economic competitiveness and enabling market access, advancing the diffusion of environmentally sound technologies and practices in production systems and partnering with the private and public sector to mobilize investments in an inclusive, sustainable and resilient manner.

2. Gaps, areas requiring urgent attention, risks and challenges: While manufacturing employment in developing countries shows an upward trend, it also displays greater levels of informality than in the past. This increase in informality, which has a negative impact on the quality of employment, tax revenues, quality of products and economic growth, can be due to inadequate and inappropriate capacity. Informality can also result from excessively burdensome regulation, which could distort competition and discourage entrepreneurship. When promoting formalization, governments need to monitor compliance with environmental, labour and quality standards. Other significant gaps include: i) industrialization planning capacity to create more and decent jobs, particularly in developing countries and especially for small and medium enterprises (SMEs); ii) effective mechanisms to mobilize national and international public and private sector investments for targeted productive investments (which requires industrialization partnerships); and iii) enhanced access, including through resilient physical and information communication technology (ICT) infrastructure, to export markets to allow the resulting local value added to be integrated in global value chains. UNIDO addresses these challenges by tapping into the potential of SMEs by upgrading their production patterns, implementing socially and environmentally responsible business practices, and linking them to other businesses, institutions, partners and global value chains.

3. Valuable lessons learned on eradicating poverty and achieving prosperity: The recent successful cases of poverty reduction through rapid industrialization show that inclusive and sustainable industrialization, with an early focus on labour-intensive and export-oriented industries and accompanied by structural transformation towards manufacturing industries, is one of the most effective ways to eradicate poverty.

4. Emerging issues and challenges: Key emerging challenges to collective poverty eradication include protectionist measures, which undermine not only the multilateral rules based trading system, but also the potential of inclusive and sustainable industrialization as a way to bolster employment and reduce poverty. Another key issue is the growing attention by the international community to the development-humanitarian nexus. The disruptive effects of natural and man-made disasters and crises are often among the underlying causes of poverty. Technical assistance programmes within the UNIDO mandate can help the post-crisis transition from relief to development. Rapid technological change also raises new challenges. On the one hand, it serves as a key source of upgrading and productivity growth and can lead to lower prices for consumers, with important welfare gains for all, to new or better products and processes and to new markets and jobs. On the other hand, labour-saving technologies, such as automation, may result in job displacement and an increase in unemployment and poverty. The impact of new technologies on employment goes beyond job creation or destruction: technological change can also replace jobs traditionally carried out by unskilled workers with new tasks requiring more qualified workers, leading to polarization of the labour market and greater income inequality.

5. Areas where political guidance by the High Level Political Forum is required: With the 2030 Agenda, the global community committed to the agenda for inclusive and sustainable development (ISID). The proclamation by the General Assembly of 2016–2025 as the Third Industrial Development Decade for Africa adds to this commitment, and tasks UNIDO with a leading role and “to scale up its technical assistance to African countries in order to promote inclusive and sustainable industrial development”. At the same time, there is also need to help the millions still living in poverty in other parts of the world. However, despite its unique role and mandate in the UN system, UNIDO has witnessed over the past few years a decreasing membership, as also noted by GA resolution A/RES/71/242. The HLPF may wish to consider appropriate ways and channels to help reverse this trend and strengthen the global political and financial support to the inclusive and sustainable industrialization agenda in its implementation phase. The HLPF may also consider raising awareness on the need for increased international cooperation, including South-South and triangular cooperation, in the field of science, technology and innovation, policy integration and improved industrial statistics.

6. Policy recommendations: Promote partnerships of host country governments, international donors, UN agencies, financial institutions and the private sector (as referred to in SDG 17) to mobilize private and public investments (including ODA) around a long-term inclusive and sustainable industrialization plan for export-oriented and job-creating industrial capacity. Design and implement industrial policies that promote employment, reduce poverty and comply with local and international standards (e.g. related to the quality of products labour, and the environment) to facilitate integration into global value chains and to make industrialization inclusive and sustainable. Provide technical cooperation services for capacity building, vocational and other training, especially for women and youth, and where possible, in partnership with the private sector. Increase public and private sector, domestic and foreign investments in research and development, innovation, education, training and infrastructure to increase competitiveness, including of SMEs. Support efforts to reduce risks associated with industrialization. Promote industrialization that encourages employment instead of displacement, and analyze and disseminate evidence and statistics associated with the effect of skilled labor bias on policy decisions.

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