UNCTAD calls for policy harmonization so developing countries can benefit from green technologies

Geneva, Switzerland, March 16, 2023

Green technologies – used to produce goods and services with low carbon emissions – offer growing and economic opportunities, but many developing countries may miss out on this opportunity unless governments and the international community act accordingly.

He Technology and Innovation Report 2023 UNCTAD’s release on March 16 warns that economic disparities could worsen if developed countries take advantage of green technologies and the many benefits of artificial intelligence, the Internet of Things and electric vehicles.

„We are at the beginning of a technological revolution based on green technologies,” said UNCTAD Secretary-General Rebecca Grinzpan. „This new wave of technological change will have strong consequences for the global economy. Developing countries must retain a greater share of the value created in this technological revolution if their economies are to grow.”

Ms Grynspan added: „Missing this technological wave through a lack of political attention or insufficient investment in building the necessary skills will have long-term negative consequences.”

Emerging markets are widening the technology gap

UNCTAD estimates that 17 frontier technologies are covered in the report By 2030 they could create a market worth more than USD 9.5 trillion, roughly three times the size of India’s current economy. But so far developed economies have taken most of the opportunities, leaving developing economies further behind.

Total exports of developed countries have risen from $60 billion to $156 billion in 2021. During the same period, developing country exports rose from $57 billion to only $75 billion. In three years, the share of developing countries in total exports has declined from more than 48% to 33%.

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According to UNCTAD’s analysis, past technological revolutions show that developing countries must act quickly to take advantage of this opportunity and put themselves on a path towards diversified, productive and competitive economies.

Developing countries are not ready to use frontier technologies.

The report includes a „Frontier Technology Readiness Index” that shows how few developing countries have the skills needed to take advantage of these technologies, including blockchain, drones, genetic modification, nanotechnology and solar energy.

Green frontier technologies such as electric vehicles, solar and wind energy, and green hydrogen are expected to reach a market value of $2.1 trillion by 2030, four times their current value. Sales in the electric vehicle market will grow fivefold from $163 billion to $824 billion by 2030.

The index ranks 166 countries according to indicators of information and communication technologies (ICT) skills, research and development, industrial capacity and finance. It is dominated by high-income economies, notably the United States, Sweden, Singapore, Switzerland and the Netherlands.

Although developing countries are not ready to adopt advanced technologies, many economies in Asia have made important policy changes that have allowed them to perform better than expected in terms of GDP per capita.

India continues to perform well, performing 67 places better than expected, followed by the Philippines (up 54 places) and Vietnam (up 44 places).

The index shows that countries in Latin America, the Caribbean and sub-Saharan Africa are least prepared to take advantage of cutting-edge technologies and are at risk of missing out on current technological opportunities.

Great efforts by governments are required

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To benefit from the green technology revolution, developing countries need proactive industrial, innovation and energy policies targeting green technologies, says Shamika N., Director of UNCTAD’s Technology and Logistics Division. „Developing countries must act decisively and urgently to find the right policy responses.”

Ms Sirimanne added: „As developing countries respond to today’s urgent and interconnected crises, they must take long-term strategic steps to develop technological and innovation capabilities that will drive sustainable economic growth and increase their resilience to future crises.”

UNCTAD advocates for the harmonization of environmental, scientific, technological, innovation and industrial policies of developing countries. It calls on them to prioritize investment in greener and more complex sectors, shift consumer demand to greener products and provide incentives to increase investment in research and development.

Developing countries urgently need to strengthen the technical skills of their workforce and increase investments in ICT infrastructure.

A favorable international business environment is essential

But developing countries cannot use green technologies alone. Much of the success of its domestic policies depends on global cooperation through international trade, which will require reforms to existing trade rules to ensure their consistency with the Paris Agreement to address climate change.

International trade rules should allow emerging green industries to be protected through tariffs, subsidies and public procurement, the report says.

International support is also essential for developing countries to adopt green technologies. The report proposes to use the same principles used against the COVID-19 pandemic, when some countries were allowed to manufacture and distribute vaccines without the patent holder’s consent. This will give manufacturers in developing countries faster access to key green technologies.

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The report notes that international trade and related intellectual property rules should give developing countries more flexibility to implement industrial and innovation policies so that new green technology sectors can emerge there.

The report calls for an international guaranteed procurement program for tradable green products, international coordination in research on green technologies, greater support for regional centers of excellence for green technologies and innovation, and multilateral funding to stimulate green innovation and enhance cooperation between countries.

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About UNCTAD

UNCTAD is the main agency of the United Nations dealing with trade and development. It is a permanent intergovernmental organization established by the United Nations General Assembly in 1964.

UNCTAD is part of the UN Secretariat and consists of 195 countries, one of the largest in the UN system. UNCTAD helps developing countries access the benefits of a globalized economy more equitably and effectively.

We provide economic and trade analysis, facilitate consensus building and provide technical assistance to help developing countries leverage trade, investment, finance and technology for inclusive and sustainable development.

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