Abstract
In this paper, we take stock of recent debates in scholarly work and actual policymaking practice on industrial policy. Moreover, the paper identifies how developing countries are responding to structural trends such as digitalization, decarbonization and recalibration of global production, which are shaping the future of industrial development, and the scope of industrial policy. These trends are compounded with short-term effects from post-pandemic recovery, international conflict, and macroeconomic instability. Furthermore, the paper examines trends in industrialized countries towards the explicit use of industrial policies to promote and safeguard strategic national interests. All these factors result in an increasingly complex environment around industrial development which should open opportunities and challenges for developing countries. We offer some recommendations for industrial policy in developing countries, in ways that balance between national interests, the scope for regional coordination and collaboration, the international governance around industrialization, and the commitments of the global community towards the UN 2030 Development Agenda and its associated Sustainable Development Goals (SDGs).
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Notes
Emphasis in the source.
Emphasis in the source.
According to Constantinescu et al. (2019), should trade tensions intensify and affect investors’ confidence, up to 30.7 million people could slide into poverty at levels below $5.50 a day under a worst-case scenario, with serious long-term consequences in GVCs.
See, for instance, Warwick (2013).
See UNIDO (2023) for the complete analysis, and Annex I for the methodological details on how these indicators are constructed.
Advanced digital production technologies combine hardware (advanced robots and 3D printers), software (big data analytics, cloud computing, and artificial intelligence), and connectivity (the Internet Things) (UNIDO 2019).
According to IEA (2022), energy efficiency actions accelerated globally in 2022 after several years of slow progress. Global investments in energy efficiency—such as building renovations, public transport and electric car infrastructure—reached 560 billion USD in 2022.
The manufacturing sample is from the FactSet Supply Chain Relationships dataset which includes information on companies and the geographic locations of their suppliers during various time periods (Falk et al. 2021).
The UN 2023 Financing for Sustainable Development Report, for instance, advocates a “revolutionary financial and industrial development” to accelerate the progress on the achievement of the SDGs.
For a discussion, see Santiago and Komendantova (2022).
Regarding the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), African Group (2023a, 5) compels the WTO “to ensure that trade rules provide a better balance between protection and incentives to promote research and innovations on the one hand and the unfolding needs of society on the other” and to further facilitate technology transfer from developed to developing countries.
Emphasis in the original source.
We kept only those official indicators for which it would be possible to cover at least half of the countries included in each region considered. See Annex Table 5 for the details.
Available at https://unstats.un.org/sdgs/dataportal.
This is based on the Note by the Secretariat PBC.39/11 of 14 March 2023, titled “Lists of States included in Annex I to the Constitution of UNIDO.” The lists are a classification established by the United Nations. UNIDO continued the classification when it became a specialized agency in 1985. Lists A, C ,and D can be associated with the industrializing world. List A includes economies from Africa and Asia-Pacific; List C, economies from LAC; and list D, economies from Eastern Europe.
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Annex
Annex
1.1 Methodology to Assess SDG 9 Progress: Indicators and Benchmarks
There are three analytical dimensions to assess SDG 9, namely industry, infrastructure, and innovation. Each of the three dimensions combines multiple indicators (see Annex Table 4). In the analysis, however, we could not include all the official indicators listed in the SDGs due to constraints in data availability.Footnote 14
For each indicator, the data was extracted from the official SDG Global Database.Footnote 15 After filling in several gaps in data using standard statistical techniques, we defined specific targets and calculated the distance of each country to that target. Whenever possible, the target was defined using the ideal target implicit in the 2030 Agenda. This is the case, for instance, in indicator 9.C.1., “Proportion of population covered by a mobile network, by technology” where the target was set to 100%. For all the rest, the target was defined based on the best performance in all countries with available data between 2000 and 2021, after excluding outliers. Indicators were then normalized between zero and one (the latter representing optimal target achievement) and aggregated by dimension at the country level using arithmetic means. Finally, country-level indicators by dimensions were aggregated at the regional and sub-regional levels using population-weighted averages.
As there is no common definition of what constitutes the developing world, we focus on all low- and middle-income countries (following the most updated World Bank classification by income level) and selected high-income countries which are part of Lists A, C, and D included in Annex I to the Constitution of UNIDO.Footnote 16 Within this group, we distinguished four regions: Africa, Asia-Pacific, Eastern Europe, and Latin America and the Caribbean (LAC).
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Santiago, F., Haraguchi, N. & Lavopa, A. Global Trends and World Order: Implications for New Industrial Policies in Developing Countries. J Ind Compet Trade 24, 5 (2024). https://doi.org/10.1007/s10842-024-00419-4
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DOI: https://doi.org/10.1007/s10842-024-00419-4