“To achieve inclusive and sustainable industrial development, all of UNIDO’s tools will be used” – LI Yong
Since taking office in June this year, you have travelled to all the regions of the world to meet with representatives of member states and leaders of industry. One of the things that you have stressed in these meetings is your vision of ‘inclusive and sustainable industrial development’. Could you explain what that is?
When I went to the United Nations General Assembly debate in September 2013, I listened carefully to the leaders’ statements about the three dimensions of sustainable development – economic, social and environmental – and the call for a comprehensive list of Sustainable Development Goals. I was impressed that there is a global agreement that our societies and economies must find a path of sustainable development if we want to tackle the challenges of our times. How else can we meet the growing challenges of job creation particularly amongst our youth; advance gender equality and women’s empowerment; address social issues, like education and health; and find solutions to all the looming environmental issues on our planet?
How can we possibly achieve all these development goals? For the United Nations Industrial Development Organization, poverty eradication is all-important. This is the crucial and urgent task, and all member states have agreed that it can only be achieved through strong, inclusive, and sustainable economic growth, and the effective integration of the economic, social and environmental dimensions of sustainable development. UNIDO wants to put the emphasis on industrialization because industry is the effective driver of economic and social development, and thus the basis for achieving all the other goals. We believe that industry is a primary creator of jobs and the motor for growth and prosperity worldwide.
The international community is working very hard to achieve a new set of strategic development goals for the coming decades, and UNIDO’s work, our goal, our mandate, should be in line with international efforts. UNIDO will focus on supporting inclusive and sustainable industrial development.
I take “inclusive” to mean that all countries, all peoples, the private sector, civil society organizations, multinational development institutions, and all parts of the UN system, are all partners with UNIDO in promoting industrial development to achieve the eradication of poverty. There should be equal opportunity for all peoples to create industries, to create manufacturing activities. All countries should have this kind of opportunity, and the benefits produced or generated by this process of industrial development should create shared prosperity. The UN slogan which I support very much is ‘Leave no one behind’, and that is relevant to us, to UNIDO, when we promote industrial development. By participation and sharing, no one will be left behind.
As for the meaning of “sustainable” in this context, we are clear that industry generates the wealth needed to address critical social and humanitarian needs. At the same time, however, it is also clear that this growth must urgently be decoupled from increased raw material use and negative environmental impacts. As a key driver of this growth, industry must play its part by becoming significantly cleaner and vastly more energy- and resource-efficient, to guarantee the health, prosperity and security of our peoples. In short, when we promote industrial development and manufacturing activities, we should try to incorporate the environmentally sound production methodologies available to us, such as energy efficiency, clean production technologies, reduced emissions and more effective use of resources.
Can you explain the relevance of partnerships as a way to create the enabling environment for this inclusive and sustainable industrial development?
To achieve inclusive and sustainable industrial development for our member states, all of UNIDO’s tools in its own tool-box will be used. In addition, we need to develop stronger partnerships to make our development impact even bigger. This means further expanding the strategic partnerships that we have now with our member states, with the UN family members, and also with private sector companies, with whom we are developing the Green Industry Platform and many other important programmes.
These kinds of partnership should be expanded, because industrialization is not about building one or two factories, or just one or two assembly-lines. Industrialization is a holistic movement that helps countries to rise from a lower level of development to a higher level. This is a set of processes that is beyond the capacity of any single institution to support fully, and requires strong partnerships with all related stakeholders, including bilateral and multilateral development agencies, international financial institutions, the private sector, academia and civil society.
You have stressed the importance, the centrality of industrial development. Is this a message that resonates with the stakeholders that you have been meeting?
I have recently travelled to Africa, to the African Union headquarters in Ethiopia and to South Africa. Leaders of the African Union told me that industrialization is high on the agenda for Africa in the next 50 years. That is important news. They told me two things. One is that they do not want to depend indefinitely on official development assistance. Second, they want to use their natural resources more effectively. Only through diversifying their economies and transforming towards manufacturing, adding value to their natural resources, can they create jobs, create wealth and raise the living standards of their people. For more than ten years, some of the countries in Africa have achieved relatively high growth rates.For example, last year Ethiopia’s growth rate was 9.7%, almost the fastest growth rate in the world. That group of countries is moving up.
At the moment, two-thirds of the Least Developed Countries are located in Africa, mainly dependent on agriculture. They can go one step further and we can help them to develop, to create higher value added, more output, and then on to manufacturing, food-processing, food-packaging, leather-processing, wood-processing, furniture making, all these kinds of manufacturing and industrial development. These countries will develop. This is their leaders’ vision, not one only promoted by UNIDO. I was so glad to hear that and very happy that UNIDO has been invited to participate in this process.
The financial crisis taught us many lessons. One of them is that we should re-focus on the development of the “real sector”. This is not a developing countries’ concept, nor a middle-income countries’ concept. This is accepted by many countries. I am very happy to see that many advanced countries are re-focusing on industrialization. They are promoting some new policies, supporting manufacturing, employment, small and medium-sized enterprises and exports. When I went to the European Union, I was pleased when they told me that industrialization is also a priority for them, just as the African leaders have told me before.
Why do countries now all accept that industry is crucial? Look at history. In the two or three hundred years since the start of the industrial revolution, a large number of countries have transformed themselves from agriculture-based economies to industrialized ones. And then, in the 20th century, countries like Japan and the Republic of Korea moved very fast after the Second World War, and have now become members of the Organization for Economic Cooperation and Development. One of the most useful policy tools in this context was manufacturing. What created the ‘miracle’ of the South-East Asian countries? Manufacturing, industrial development. Those ‘tigers’ and ‘dragons’ moved quickly up to the middle- and high-income country level. China learnt from them in the 1980s, and we opened up a very, very poor country, with a big population, to the world.
You can’t imagine that in 1978 GDP per capita at current prices was US$228, and now, after more than 30 years of opening-up reforms, last year GDP per capita was over US$6,000. What was the driving force? Agriculture? No. We transformed from an agricultural- based to a more industrialized country in 30 years.
Regarding the concept of inclusive and sustainable industrial development, some might say that this is a contradiction, that industrial development requires resources, which are becoming scarcer, and produces waste, which is becoming a bigger threat to the future of the planet. How would you respond to this?
This is a very good question and an important challenge. UNIDO is promoting inclusive and sustainable industrial development to try and overcome the negative impacts of industrialization. When we are manufacturing products to use and to trade, and for growth, we need to consume raw materials. We need to use energy, water, electricity, oil etc, and we create some pollution – damaging forests and arable land. The international community is working very hard to avoid such negative effects, to reduce them and to eliminate them. But it is, and will remain, a learning process.
Look at the Western countries; for instance, London in the United Kingdom. When I was young, I learnt that it was the smoky city, the city of smog, but now it’s so clean. They could do it. It proves we can do it. They learnt a lesson, and now you don’t see these kinds of things happening, yet industry is still there, flourishing. Many countries are developing their industry on a very big scale but now they can still keep a clean environment.
Do you think that improvements in resource efficiency and energy efficiency, and the scaled up use of clean energy can offset the impact of the growth in the world’s population?
Industrial development is an inevitable process. For any country to move up from low levels of development – and high levels of poverty – to an advanced level of development, they need industrial development. Many countries that have already advanced still have clean air. What makes this possible? The answer is technology. We don’t only have one choice, industry or pollution. We can move ahead with an effort to reach truly sustainable growth. For achieving this, South-South cooperation will be an important complement to the huge scaling up of investments required for infrastructure and industrial growth. We therefore must create the necessary enabling policies and institutional environment to allow for more South-South knowledge exchange so that we can all learn from each other’s experiences and create more opportunities for investment, joint ventures and trade.
The challenge is to move towards sustainable production and consumption patterns, while still enjoying the benefits of economic growth and without exacerbating social tensions. Policies and technical programmes are needed to realize the idea and concept of sustainability across all its dimensions. To achieve these goals, UNIDO focuses on implementing programmes and providing policy advice to support the building of industrial capacities and qualitatively improving industrial capacities. The thematic focus may vary from creating opportunities in agribusiness, to building quality and standards infrastructure, to supporting the creation of industries delivering environmental goods, depending upon the specific requirements of the countries concerned. But the common goal remains the same: achieving inclusive and sustainable industrial development.
To sum up, all countries have realized that industrial development is a necessity for achieving durable and resilient economic growth, but if industry is to be sustainable in the long run, it must undergo a rapid transition. In short, it must quickly adopt a business model that enables it to produce more of the goods and services needed by an expanding world population, while using ever fewer resources and producing ever less waste and pollution. Nobody should be left behind in this process. We must make sure that this industrial growth is inclusive and prosperity is shared. UNIDO wants to lead in forging partnerships, where governments, the private sector and other actors work together to create the enabling environment needed for this transformative change towards this goal of inclusive and sustainable industrial development. If we all work together on this, I believe that we will be able to eradicate poverty relatively quickly.
LI Yong has had an extensive career as a senior economic and financial policymaker. As Vice-Minister of Finance of the People’s Republic of China and member of the Monetary Policy Committee of the Central Bank for a decade, LI was involved in setting and harmonizing fiscal, monetary and industrial policies, and in supporting sound economic growth in China. He accorded great importance to fiscal and financial measures in favour of agricultural development and small and medium-sized enterprises, the cornerstones for creating economic opportunities, reducing poverty and promoting gender equality.