A Technical Note on the Analytical Framework of GIFIUD (Growth Identification and Facilitation for Industrial Upgrading and Diversification)
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A Technical Note on the Analytical Framework of GIFIUD (Growth Identification and Facilitation for Industrial Upgrading and Diversification) INCLUSIVE AND SUSTAINABLE INDUSTRIAL DEVELOPMENT A Technical Note on the Analytical Framework of GIFIUD 1 A Technical Note on For comments The Analytical Framework of GIFIUD This Technical Note has been prepared for the UNIDO © UNIDO 2015. All rights reserved. project “Integrated Industrial Upgrading and Enterprise Development Approach”. Comments and suggestions This document has been produced without formal United on issues raised in this document are welcome and Nations editing. The designations employed and the may be addressed to Mohamed Lamine Dhaoui at presentation of material in this document do not imply the [email protected]. expression of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization (UNIDO) concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. Designations such as “developed”, “industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgment about the stage reached by a particular country or area in the development process. Mention of firm names or commercial products does not imply endorsement by UNIDO. The opinions, figures and estimates set forth are the responsibility of the authors and should not necessarily be considered as reflecting the views or carrying the endorsement of UNIDO. Photos © UNIDO A Technical Note on the Analytical Framework of GIFIUD (Growth Identification and Facilitation for Industrial Upgrading and Diversification) Vienna, 2015 FOREWORD FOREWORD As the global community embarks on formulatingSince the early nineteentha existing century, and livelihoods potential in new development agenda to build on themodern foundation societies havestrengths been built andon the where economic the foundations created by the industrial revolution. laid by the Millennium Development Goals,Industrialization the need helpedpolicy lift hundreds makers of millionsclosely of for integrating inclusive and sustainablepeople industrial around the globefollow out ofmarket poverty trends. over the last development (ISID) into this new agenda200 years.has been Introduction to recognized widely and globally. ISID calls for an Empirical evidenceFOREWORD expansion of productive capacities andThe acountries growth that of havefurther achieved suggestssteady economic that growth – driven by industrialization, international responsible value addition to encourage increased focused investment trade and related services – are also the ones that Since the early nineteenth century, livelihoods in job creation and income generation, whilehave managedrespecting to reducepromotion, poverty most eff industrialectively. modern societies have been built on the economic In fact, there is not a singleupgrading country and in the industrial world planetary boundaries and ensuring an efficient use of foundations created by the industrial revolution. which has reached a highinfrastructure stage of economic support, and scarce resources. Industrialization helped lift hundreds of millions of social development withoutsuch as having special developed economic an advanced industrial sector. people around the globe out of poverty over the last Decent jobs arise out of economic development, from zones (SEZs) and industrial200 parks, years. are among the most IntINCrodLUSuIVcEt AionND S tUoprivateSTAIN entrepreneursABLE and governmentsYet, generating this prosperity haseffective not been evenly tools spread to helpthroughout countries the world. overcome There the hard new competitive businesses and economicremain considerableactivities. diandfferences soft between infrastructural and withinThe regions,bottlenecks countries countries that tohave and inclusive achieved andsteady economic INDUSTRIAL DEVESustainedLOPMEN job Tcreation requires structuralsocieties. change, Too often,or growthsustainable has left industrialization. significant segmentsgrowth of – thedriven population by industrialization, international the ability of an economy to constantly generatebehind. This new is particularly the case for women andtrade young and people. related services – are also the ones that have managed to reduce poverty most effectively. fast-growing activities characterized by higher value This is particularly true for many lower-income At the same time, one consequence of the current Inpatterns fact, there of is not a single country in the world added and productivity and increasingindustrialization returns to is theircountries, considerable where environmental the need footprint. for growth No country is urgent but improving the overall whichinfrastructure has reached anda high business stage of economic and scale. Since the industrial revolution, hasmanufacturing yet fully resolved the issues of effective waste socialmanagement development and proper without having developed an control of soil, water and air pollution. I cannot emphasize enough the has been at the core of structural change, consistently environment will take advancedtime and industrial require sector. substantial importance of promotingresources. cleaner and In resource-ethese countries,fficient production, the concentrated and the use creating higher levels of output and employment,decoupling of and economic growth from environmental degradation. leading toINC an unprecedentedLUSIVE AN growthD SU inS incomes.TAINABLE of limited resources focusedYet, this prosperityon specific has notsectors been evenlyor spread throughout the world. There Based on the realizationlocations that current can modes reap of “quick industrializationremain wins”. considerable It areshould neither dibe fferences stressed, between and within regions, countries and It is thereforeIND noU SsurpriseTRIA Lthat DEVE moreLfully OPMENand inclusive more norT properlyhowever, sustainable, that “quickthe Member wins”societies. States are of notToo UNIDO, often,necessarily at growth has“easy left significant segments of the population attention is being focused on the analysistheir Generalof patterns Conference wins”. in Peru Political in December vision 2013, andbehind. adopted public-private This the is Lima particularly partnerships the case for women and young people. of economic transformation. Within this Declarationfield, the in Newwhich theyare agreedpreconditions that inclusive for and success, sustainable as industrial are high levels of development must become an important part of theAt world’s the same long-term time, one consequence of the current patterns of Structural Economics (NSE), championeddevelopment by Justin agenda. professionalism In doing so, they have and clearly transparency.industrialization recognized the role is their considerable environmental footprint. No country Lin, former Chief Economist of the Worldthat inclusiveBank and and sustainable industrial developmenthas playsyet fully in eradicating resolved the issues of effective waste management and proper currently the Honorary Dean of the Nationalpoverty School and fostering for This sustainable technical development. report Thisaimscontrol Declaration to of demonstrate soil, will water shape and how air pollution. the I cannot emphasize enough the Development of the Peking University, arguesthe future for operations, the industrial spirit and direction policy of implementationUNIDOimportance in the years of to promoting come.tools mentioned cleaner and resource-efficient production, and the identification of sectors according to the economy’s above that UNIDO deploysdecoupling at ofthe economic service growth of fromits environmental degradation. latent comparative advantages and the use of industrial Member States could be enhanced with innovative, Based on the realization that current modes of industrialization are neither policies and programs to facilitate rather than protect new approaches such as GIF, among others, for Growth Identificationfully and inclusive Facilitation nor properly for sustainable, Industrial the Member States of UNIDO, at the prioritized sectors and calls it Growth Identification their General Conference in Peru in December 2013, adopted the Lima and Facilitation (GIF). LI Yong Upgrading and Diversification (GIFIUD). Director General Declaration in which they agreed that inclusive and sustainable industrial Since UNIDO and a small developmentnumber of Member must become States an have important part of the world’s long-term History tells us that sector-focused industrial policies development agenda. In doing so, they have clearly recognized the role have played an essential role to jump-start development already started piloting GIFIUDthat inclusive to learn and from sustainable experience, industrial I development plays in eradicating and achieve dynamic structural change in a developing invite the readers to activelypoverty follow and upfostering on results sustainable achieved development. This Declaration will shape in the field and to contributethe future operations,their experiences spirit and and direction of UNIDO in the years to come. economy. It is a path to rapid, inclusive and sustained 2 growth. Yet these very policies have failed in some opinions to the debate. countries where the targeted industries are not compatible with the country’s comparative advantage, or where policy implementation is captured