Under what conditions can technological changes cause structural changes in developing countries and lead to long-term, socially inclusive and environmentally sustainable industrial development? This is a central issue addressed in the Technology Set Industrial Development Report.
Production process. The concept is part of new Sustainable Development Goal 9, aimed at creating sustainable infrastructure, promoting inclusive and sustainable industrialization, and promoting innovation. Three elements form the basis of this report.
The first is sustainable long-term industrialization as a driving force for economic development.
The second is industrial development and a society that promotes social inclusion and offers equal opportunities and equitable sharing of benefits.
And the third is environmental sustainability, separating the prosperity created by industrial activity from the overuse of natural resources and negative environmental impacts. This three-dimensional structure extends to policy recommendations for many of the tradeoffs that countries face in supporting economic growth, promoting social inclusion, and moving towards more environmentally friendly economic change.
Technological age. Modern industry plays a key role in long-term structural changes. This creates many productive formal jobs in the early stages of development. It also fosters technology and innovation to support productivity growth and growth in other sectors. Finally, it affects employment, wages, technological renewal and sustainability, which vary depending on the stage of development. This is due to the fact that the manufacturing industry is changing economic structures, usually by transferring labor-intensive activities to more capital-intensive and high-tech ones.
Digital novelties. Each industry sub-sector also modifies products and production processes, increasing the use of capital and technology. In developing countries, premature deindustrialization can be a serious threat to overall growth, stifling the development potential of manufacturing. The type of informal service activity that arises in this case reduces growth more than it contributes to it. On the other hand, when mature deindustrialization occurs at higher levels of per capita income, the types of services that appear – logistics, business services and IT services – are much more dynamic and can take on and complement the role the growth engine plays industry.
How can developing countries catch up with the global economic and technological frontier? Promoting technological change through investment in human capital, improving innovative systems and modernizing global value chains (GVCs). Instead of producing new technologies themselves, developing countries can use technology transfer from abroad to grow.
But this requires efforts to adapt the knowledge flowing into the economy, as well as broader development opportunities, in other words, mainly education and skills. Living standards increase with productivity gains thanks to technological advances that have emerged from globalization in recent decades. To support economic growth, countries need technological changes that drive growth. This requires an understanding of which industries stimulate the growth process and how they modernize their technology.
Developing countries, especially in the early stages of industrialization, have greater opportunities for inclusive industrial development with rapid growth and limited environmental damage. The abolition of labor-intensive industries exporting products to major global markets can stimulate both production and employment, and thus contribute to sustainable and inclusive growth. Limited production volumes and concentration on less polluting activities tend to make manufacturing less harmful to the environment at a later stage.
As countries acquire skills and improve their infrastructure, opportunities for growth and job creation appear in other sectors, but they tend to take a broad approach that uses more and more natural resources. and energy. Most middle-income industries are resource intensive with relatively low emissions. Thus, low-income countries have good prospects for continuing the path of inclusive and rapid development, but are starting to face sustainability challenges.