Responding to the crisis and building a better future: inclusive and sustainable industrial development
By Li Yong, Director General of the United Nations Industrial Development Organization (UNIDO)
Just as we entered the Decade of Action, determined to accelerate progress towards the achievement of the 2030 Agenda, the COVID-19 pandemic caused widespread loss of life and human suffering in all parts of the world. As with every disruptive event, this tragic crisis may provide us with important lessons and an unexpected opportunity to build a better future.
The pandemic and related containment measures have hit the industrial sector, a major employer and source of income, in various ways. Shop closures, unemployment, lower incomes for both workers and business owners, and other uncertainties on the consumer side resulted in a reduced demand for goods and products. Countries that are traditional producers, for example of leather, textiles and wearing apparel, machinery and motor vehicles, were hit particularly hard. With factories either closed or operating well below capacity, also manufacturing output dropped, resulting in declining trade and disruptions in cross-border production networks.
The revenue losses due to lost earnings are subsequently felt through declining household incomes, unemployment and diminished employment opportunities, and reduced remittances. Development progress made over the past decades is now at clear risk to be undone.
Despite this dismal backdrop, several lessons can be drawn from the COVID-19 crisis.
First, the reliance of humanity on manufactured products became evident. Apart from creating jobs and incomes, industry is critical for providing essential goods, food products, medical and pharmaceutical products.
Industry played an important role in the response to health crisis and took swift action following calls by governments to speed up and scale up production of critical supplies. Some firms temporarily repurposed their production to meet the increased demand for personal protective equipment for the health care sector and the wider population.
Second, since the financial and economic crises in 2008, a gradual rebalancing of the relationship between the free market and the state can be observed. The current crisis highlights the importance of the state to protect its people. Even in the most market-oriented countries, governments stepped in to limit harm and contain the economic downturn. Governments have a clear mandate to balance the risks, steer recovery efforts, and respond to unemployment, inequalities and economic insecurities.
Third, in the face of a virus that knows no borders, the COVID-19 crisis also reemphasized the need for international cooperation and a multilateral approach. While globalization has helped lift millions out of poverty, and while the interconnectedness of national economies is a source of resilience, the crisis showed gaps and vulnerabilities, once travel bans, closed borders and other restrictions are put in place.
The crisis clearly showed that not less, but more international coordination and cooperation is necessary. Sharing of information, knowledge and best practices, joint measures, policy coherence and a multilateral response are essential to address global crises. For example, uncoordinated and inward-looking decisions and the call for the nationalization of supply chains will reduce opportunities for developing and emerging economies to access international markets, technologies, innovation and knowledge. It will also expose countries to additional risks and frictions and exacerbate existing uncertainties about international trade.
A fourth and important realization is that we cannot be complacent in face of other major crises ahead of us. The COVID-19 pandemic is a strong wake-up call for the international community to prepare better for what lies ahead and to build a more resilient, inclusive and sustainable future.
The years 2015 to 2019 were the hottest ever on record. Rising temperatures, extreme weather conditions, such as hurricanes, floods, and wildfires, rising sea levels are warning signs of what expects humanity if we don’t manage to flatten the climate change curve.
We stand at a turning point, where governments need to prioritize reforms based on lessons learned. A business-as-usual recovery would be an enormous missed opportunity and needs to be avoided. Building back better does not have to be a choice between economic recovery and environmental sustainability. The stimulus packages, primarily designed to revive economies, can be allocated to sustainable energy investments, circular economy models, resource-efficient and cleaner production, while creating new skilled jobs and income at the same time.
As the world emerges from one crisis, it will be critical to be prepared before the next one strikes. With developing countries and emerging economies facing serious challenges and with substantial increases in poverty and inequality, we need to step up efforts towards achieving the goals of the 2030 Agenda. The United Nations and its specialized agencies, such as UNIDO, play a critical role in building international partnerships and mechanisms for an inclusive, sustainable and resilient future.
*The views expressed in this blog are the author’s and do not necessarily reflect the opinion of UN DESA.
SDG 9 in numbers
Global growth in manufacturing had already steadily declined even before the COVID-19 outbreak. The pandemic is hitting manufacturing industries hard and causing disruptions in global value chains and the supply of products.
- The air transport sector has been hit the hardest by the pandemic. It is forecasted that airlines will have 1.5 billion fewer international air travellers in 2020 and that international seat capacity could fall by almost three quarters.
- In 2019, manufacturing value added grew only 1.5 per cent since 2018, the slowest year-on-year growth rate since 2012, influenced primarily by tariff and trade tensions affecting all regions. Manufacturing activities are at high risk of disruption during the current crisis, which will have an impact on the sector’s employment levels.
- The share of manufacturing in GDP in least developed countries increased, from 10 per cent in 2010 to 12.4 per cent in 2019, but the growth rate was too slow for the target, doubling the industry’s share in GDP by 2030, to be reached.
- In 2019, 14 per cent of the world’s workers were employed in manufacturing activities, a figure that has not changed much since 2000.
- According to surveys covering the period from 2010 to the present, in developing countries, 34 per cent of small-scale industries benefit from loans or lines of credit, which enable them to integrate into local and global value chains.
- After three years of stability, global carbon dioxide emissions from fuel combustion started to rise again in 2017, reaching 32.8 billion tons, underpinned by economic growth and a slowdown in efficiency improvements. However, the intensity of global carbon dioxide emissions has declined by nearly one quarter since 2000, showing a general decoupling of carbon dioxide emissions from GDP growth. The same trend was visible in manufacturing industries after 2010, with global manufacturing intensity falling at an average annual rate of 3 per cent until 2017.
- Globally, investment in research and development as a proportion of GDP increased, from 1.5 per cent in 2000 to 1.7 per cent in 2015, and remained almost unchanged in 2017, but was only less than 1% in developing regions.
- The number of researchers per 1 million inhabitants increased, from 1,018 in 2010 to 1,198 in 2017, ranging widely, from 3,707 in Europe and Northern America to only 99 in sub-Saharan Africa. In addition, women represented only 30 per cent of global researchers.
- The share of medium-high and high-technology goods in world manufacturing production reached nearly 45 per cent in 2017. Medium-high and high-technology products continued to dominate manufacturing production in developed regions, reaching 49 per cent in 2017, compared with 9 per cent in least developed countries.
- Nearly the entire world population lives in an area covered by a mobile network. It is estimated that, in 2019, 96.5 per cent thereof was covered by at least a 2G network, with 81.8 per cent covered by at least a long-term evolution network.
Get more SDGs data from UN DESA’s Statistics Division.
2020 UN E-Government Survey set to launch on 10 July
Has there ever been a more important time to take stock of digital government across the world? In this moment, with an increasingly digital society, and in the midst of the COVID-19 pandemic — which has shone the brightest of spotlights on the extraordinary importance of being online, reflecting digital government development is critical in understanding the state of play with regard to digital connectivity, government capacity and sustainable development.
“Taking stock” is what the United Nations E-Government Survey does – and the 2020 edition, to be launched globally on 10 July, will provide this up-to-date assessment.
For the past 20 years, the Survey has been benchmarking digital government development of all 193 United Nations Member States. This process of regularly monitoring, measuring and evaluating the levels of digital government services across the world has established a unique dataset, providing research insights and trend analysis that serve as a tool to guide digital government policies and strategies.
The 2020 Survey continues building on this body of work. While it is no surprise that many more countries and municipalities are pursuing digital government strategies, some approaches are radically different from those guiding earlier initiatives.
Some of these new approaches governments are taking in pursuit of digital transformation include the delivery of government as a platform, the integration of online and offline multichannel delivery, the agile development of digital services through a whole-of-government integration or a whole-of-society engagement, the expansion of innovative e-participation and partnerships, the adoption of data-centric approaches and the strengthening of digital capacities to deliver people-centric services. The assessment of local municipal e-governments, first piloted in 2018, has extended its scope from 40 to 100 municipalities across the world.
An Addendum to the 2020 Survey addresses digital government responses to COVID-19, based on primary data research between March and May 2020, reveals interesting findings on the roles of digital government in managing the pandemic. While some governments have exhibited high levels of transparency when reporting and sharing crisis-related information, others have demonstrated great agility in developing dedicated COVID-19 portals and government-supported apps to provide continually updated information and resources.
In the post COVID-19 world, the way forward is a new “digital normal” in responding to global challenges and pursuing sustainable development. More information will be made available at the global launch of the 2020 edition of the United Nations E-Government Survey. It will be broadcast live on United Nations WebTV and on Facebook Live on 10 July 2020 from 11 am to 12 noon EDT.
Join UN DESA’s Under-Secretary-General Liu Zhenmin, and other experts to learn more about the intriguing findings of the Survey, its thematic chapters and the COVID-19 addendum.
For more information: UN DESA’s Division for Public Institutions and Digital Government (DPIDG)
Photo: Tom Perry/World Bank
Differences in inflation among countries spell trouble ahead
Perhaps the most pervasive image of a global crisis in our collective consciousness is that of inflation spinning out of control, complete with central banks running out of space to print further zeroes on banknotes and children building toy forts with stacks of now worthless currency. Yet, as COVID-19 plunges us into an economic crisis unseen since the Great Depression, average world inflation is falling.
The COVID-19 pandemic accelerated the recent global trend of disinflation. The GDP-weighted world average annual inflation rate plunged from 3 per cent in February to 1.6 per cent in April. The supply constraints caused by the disruption of supply chains have not, so far, given rise to significant inflationary pressures globally.
Meanwhile, the abrupt decline in the aggregate demand worldwide brought on by containment measures, such as border closures, lockdowns and social distancing, drove the collapse of the prices of oil and fossil fuel-based energy to historic lows, contributing to lower prices worldwide.
However, inflation rates are diverging among countries. The unweighted world average inflation rate has only moderately weakened from 3.6 per cent in February to 3.2 per cent in April. The majority of countries, mostly of middle- and low-income, have been experiencing rising consumer prices since the onset of the COVID-19 pandemic.
Among 123 countries where data are available for April 2020, consumer prices have increased in 72 countries between February and April—by more than 2 per cent overall in 15 of these states.
Different consumption patterns, balance-of-payments constraints and monetization of fiscal deficits could be the driver behind the diverging inflation rates among countries during the period since the outbreak of COVID-19.
The likelihood of deflation in high-income and some middle-income countries and also of further tightening of the balance-of-payments constraints in middle- and low-income countries will determine the trajectory and extent of divergence in inflation rates in the future. If inflation trends continue to go their opposite ways for developed and developing countries, they may put the world economy on a lower‑growth path, greater divergence in income growth and higher levels of inequality between countries.
Get more details in the July Monthly Briefing on the World Economic Situation and Prospects published on 1 July.