Development accelerator

China's global development initiative promotes industrialization in developing countries to make progress on the 2030 Agenda

Amid the COVID-19 pandemic, many developing countries are facing huge challenges of economic and social recovery. The implementation of the United Nations 2030 Agenda for Sustainable Development has slowed or even been reversed. In response to the global challenges, China put forward the Global Development Initiative as a solution for stronger, greener and healthier recovery and as an accelerator for the 2030 Agenda.

China's GDI calls on the international community to refocus on development and lists industrialization as one of the eight key areas for global cooperation. Industrialization, as world history shows, has been an avenue toward national prosperity and an engine for global economic growth. Despite some debates, many policymakers, academic scholars and development practitioners have reached the consensus that industrialization will still be an important driver for the developing world to boost the economy, promote social change and fulfill the 2030 Agenda.

With the digital economy's expansion, developing countries can sharpen their industrial knowledge, use advanced technologies and business models, and serve the vast global market at a lower cost and in a more convenient way. They even have the chance to catch up in certain fields by using disruptive technologies. For instance, in recent years, the rapid development of intelligent and connected vehicles has made China a promising global pilot in the industry. The applications of digital finance and e-commerce platforms have also facilitated East African countries, such as Kenya, accelerating leapfrog development.

In addition, as green industries emerge, developing countries harbor the potential opportunities of green growth. The breakthroughs in technology concerning energy exploration and utilization also release developing countries from traditional energy constraints. The International Labor Organization estimated in 2018 that compared to the business-as-usual path, progress toward sustainability in the energy sector will create about 18 million more jobs globally by 2030 and the net job creation in the Asia and Pacific region will be around 14 million.

Moreover, global industry chains have consistently promoted the international division of labor and industrial transfers. Developing countries can leverage their comparative advantages to forge competitiveness by integrating themselves into the global production network, trade system and value chains.

On the other hand, developing countries also have unfavorable situations for industrialization.

Thanks to the technological revolution, intelligent machines are gradually replacing labor in many manufacturing processes. As a result, the importance of low-skilled labor is declining, while the importance of high-skilled labor and data is increasing, weakening the comparative advantages of developing countries.

The global consensus of green development puts developing countries under enormous pressure to conserve energy, reduce emissions and promote industrial transformation. In 2021, the International Energy Agency estimated that in the net zero emissions by 2050 scenario, growth in global energy use needs to be limited to 0.9 percent per year and industry emissions should fall 2.3 percent annually by 2030, despite expected expansion in industrial production.

What's more, developing countries are facing more complex and fiercer industrial competition. The proportion of global industrial employment has declined since 2012, the global industrial system has experienced shocks brought by the COVID-19 epidemic, and global supply chains tend to be localized and regionalized in the medium and long term.

The GDI not only reflects the historical experience and current situation of global industrial development, but also contains China's ideas and solutions for industrialization in the future. The following four lessons are relevant.

The strategic role of industry in national development should be valued. It is crucial to find a way suitable to national conditions and create a stable political and economic environment for industrialization.

A people-centered approach is important to stimulate people's initiative and creativity during industrialization and take the interests of the people as the ultimate goal of industrial development.

An efficient market and effective government should be combined. The market forces are fundamental to stimulating economic vitality and optimizing resource allocation. The government plays an indispensable role in promoting technological innovation and industrial transformation via appropriate industrial policies.

International cooperation should be balanced with self-reliance. Participating in the global industrial system is a feasible way to absorb foreign capital, technology and management as well as to contribute to the global economy. At the same time, it is necessary to enhance the resilience and competitiveness of domestic industries.

Under the guidance of the GDI, the world should jointly help developing countries develop industries and promote the development transition from traditional industrialization to inclusive and sustainable industrialization.

The world should strengthen the coordination of industrial policies at the macro level and help developing countries increase the capabilities of independently making appropriate industrial policies. It should also enhance technology transfer to developing countries, deepen international collaboration on the stability of global supply chains, and support developing countries to better integrate into the global industrial system.

Multilateral development institutions, such as the United Nations Industrial Development Organization, the World Bank and the New Development Bank, should play their due roles in facilitating knowledge sharing and providing project financing to promote industrial development in developing countries. Emerging cooperation mechanisms such as the BRICS Partnership on New Industrial Revolution should be used to achieve complementary advantages.

Synergy between the GDI and regional industrial development strategies should be promoted. Developing countries should realistically evaluate the roles of domestic industries within regional and global industrial networks, analyze their advantages and disadvantages, and find their niche in the industrial chains and the direction for their industrial upgrading, so as to form a more sustainable and resilient industrial production system.

Opportunities generated by the new industrial revolution should be leveraged, together with human resource training and development, to help enterprises and labor forces in developing countries adapt to new technologies and industrial transformation. Enterprises should be encouraged to transform and upgrade business with new technologies, new processes and new business models.

The author is an associate research fellow at the Center for International Knowledge on Development.

Contact the editor at editor@chinawatch.cn