More from UNDESAVol 25 No. 7 - July 2020

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.

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