Achieving sustainable industrialisation post-COVID-19

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The 2030 Agenda for Sustainable Development

In the context of international development, the year 2015 marked the transition from the Millennium Development Goals (MDGs) to the much broader 2030 Agenda for Sustainable Development and the much more ambitious Sustainable Development Goals (SDGs). A collectively agreed set of universal goals for an inclusive and sustainable global industrialisation process.

Although progress on achieving the MDGs has been uneven across regions, significant progress has been made on the many MDG targets worldwide. Above all, extreme poverty has been reduced by half and access to schools, health services and clean water has increased. It was the MDGs that laid the foundations for what we now call the SDGs.

The SDGs are embedded in sustainability, quality of growth, and transformation. If the objective is to achieve the ambitious and wide-ranging goals specified under the SDGs, then the type of growth matters.

Ethiopia’s path of industrialisation and sustainable development

Ethiopia is an example that illustrates the commitment to sustainable growth and economic transformation. As one of the world’s fastest-growing economies, it has recorded 10.5 per cent GDP growth for 15 consecutive years, and its shared growth has increased average life expectancy by over 22 years in less than three decades.

In the last decade, Ethiopia has targeted and attracted USD 25 billion of productive foreign direct investment (FDI), of which 75 per cent is in the manufacturing sector. It has successfully built a new generation of green industrial parks providing a world-class industrial ecosystem, domestic linkages, and domestic capability. The government has focused on developing small and medium enterprises. 

Like many other African countries, Ethiopia has made a bold and swift response to COVID-19, reducing its negative impacts. Industrial parks have proved resilient in the face of the global crisis, by repurposing their production lines to produce PPE (personal protective equipment) and COVID-19 diagnostic kits.

Inclusive and sustainable industrial development

For inclusive and sustainable development, growth must generate jobs, preferably ‘quality’ jobs – that is, jobs offering higher wages and better working conditions – especially for the young. In fact, economic growth – even at double-digit level – that does not create decent jobs in sufficient quantity is unsustainable.  At the same time, however, job creation without the development of productive capacity, with economic diversification from primary to secondary sectors, particularly the manufacturing sector, is equally unsustainable.

It is inconceivable that an inclusive and sustainable development agenda can be pursued without productive investment, enabling countries to produce/manufacture high-quality goods that they can consume locally or sell competitively in international markets. UNIDO efforts in promoting the ‘inclusive and sustainable industrial development agenda’ in the last few years have been commendable and need to be supported.

Ethiopia has been one of the beneficiary countries through UNIDO’s Programme for Country Partnership (PCP). Moreover, in Ethiopia, the PCP focused on developing light manufacturing capabilities in three sectors that the government has identified as priority: agro-food processing; leather and leather products; and apparel and textiles. 

The COVID-19 crisis and its implications

The COVID-19 pandemic, which spread worldwide exponentially and spiralled into a global health crisis, has shattered economies around the world, leading to the deepest economic recession, and to social and political crisis.

The sad reality is that the crisis is threatening to reverse the gains made over past decades and push millions of people to the edge. Tens of millions of jobs have been wiped out, and about 160 million people have been thrown into extreme poverty in developing countries. 

This precarious trend can only be reversed by creating sustainable, resilient, and inclusive societies. Agenda 2030 for Sustainable Development is our blueprint for achieving this fundamental objective.

The situation we face in the wake of the pandemic means that there is even greater need for concerted global action that puts inclusive and sustainable industrial development, job creation, the development of productive capacities at its core.

The path for post COVID-19

The crisis has exposed the vulnerability of the current economic system, and the global collaboration and governance systems, and the inadequacy of technological innovation. Furthermore, it has revealed the low level of economic diversification in the hardest-hit developing countries. 

In the face of uncertainty and the complexity of the crisis, adaptive industrial policies became essential. The COVID-19 crisis showed that current business models and global value chains lack resilience.

The key lessons and the article in full, ‘Achieving inclusive and sustainable industrialisation and the SDGs in the post-COVID-19 world’, can be found on OECD Development Matters 

Professor Arkebe Oqubay, is the Senior Minister and Special Adviser to the Prime Minister of Ethiopia. He completed his PHD in Development Studies from SOAS.

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