Achieving inclusive and sustainable industrialisation and the SDGs in the post-COVID-19 world

By Professor Arkebe Oqubay, Senior Minister and Special Adviser to the Prime Minister of Ethiopia

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

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). It signalled an emerging paradigm shift in the international development agenda, a collectively agreed set of universal goals for an inclusive and sustainable global development process.

At the outset, I want to point out that, without the MDGs, we could not have arrived at the SDGs. Although progress on achieving the MDGs has been uneven across regions, significant achievements have 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.

Among others, the SDGs (such as Goal 9) emphasize the need for full and productive employment; investing and advancing industry, innovation, and infrastructure; reducing inequality; promoting sustainable cities; and strengthening development partnership. In this spirit, the goals are embedded in sustainability, quality of growth, and transformation.  In short, 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. Ethiopia, one of the world’s fastest-growing economies, 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.

It has adhered to developing productive capacity with a focus on industrialisation and the transformation of agriculture. In the last decade, Ethiopia has targeted and attracted USD 25 billion of productive 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 eco-system, domestic linkages, and domestic capability. The government has focused on developing small and medium enterprises. This strategy has been integrated with energy and transport infrastructure, and the expansion of technical schools and universities.

Ethiopia’s experience shows the vital role of industrial development strategy and policy learning, and the necessity of industrial development for job creation, export capability, and economic transformation.

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. Its flagship carrier, Ethiopian Airlines, has adapted to the new reality and has proved its resilience by diversifying and shifting to cargo. It has neither laid off staff nor cut their benefits, and has survived without losses, without enjoying a government rescue package.

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; but at the same time, job creation without the development of productive capacity, with economic diversification from primary to secondary sectors, particularly the manufacturing sector, is equally unsustainable.

Judging by the development experiences of East Asian countries and my own recent experience in Ethiopia, it is inconceivable that an inclusive and sustainable development agenda can be pursued without productive investment and the development of domestic productive capability that enables countries to produce/manufacture high-quality goods that they can consume locally or sell competitively in international markets. Viewed from this perspective, 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), which is a multi-stakeholder partnership model that supports countries to achieve inclusive and sustainable industrial development. 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 impact on poverty reduction and on some of the social objectives incorporated in the SDGs is immense.

The COVID-19 crisis and its implications

To everyone’s surprise and contrary to earlier predictions, we entered the new decade facing an unprecedented and profound crisis. 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. The health emergency and economic recession coincide with the rapid growth of the climate change crisis, and inequality continues to rise within and among countries.

This precarious trend can only be reversed by creating sustainable, resilient, and inclusive societies. While the focus now is to do everything possible to contain the impact of the pandemic, efforts should be directed towards planning for a post-COVID-19 crisis world. Agenda 2030 for Sustainable Development is our blueprint for achieving this fundamental objective.

Unfortunately, the challenge is not only that the world is not on track to meet the SDGs by 2030, but that progress has either stalled or been reversed. That is why accelerating progress towards the SDGs is not an option but an absolute imperative during this Decade of Action.

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. Economies that responded effectively to the crisis were those that developed and deployed their industrial capacity and technologies (artificial intelligence and big data, bio-medical).

The application of digital technology in work and learning has expanded during the crisis. Government coordination, political commitment, and adherence to scientific evidence provided solutions. 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 are:

  • Building resilience and adaptive leadership is an essential feature of government policymaking. This requires policymakers to learn, and policy capability becomes critical. Leadership and policymaking will need to be redefined in the new environment.  
  • The crisis has demonstrated that industrialisation is the most promising pathway for job creation, the development of productive capacity, and sustainable growth and economic transformation.  However, a commitment to green and carbon-neutral industrialisation is also vital.
  • Technological advancement and digital technology can be catalysts for building resilience, enhancing productivity, and changing the way we work and learn. Smart technologies will enable the wider application and use of green industries.
  • Global collaboration has become the foundation for averting global threats and maximizing opportunities. The Compact with Africa pioneered during the German G-20 presidency is an example.  This kind of collaboration must focus on supporting developing countries to expand productive investment and build infrastructure. International development assistance for robust economic recovery and debt relief is also essential.

I believe UNIDO, member countries, and international partners have the opportunity to jointly work for the achievement of Agenda 2030.