5 step-guide to shape the future of global industrial strategies

It goes without saying that 2022 was a challenging year on many fronts. Climate change, wars and conflicts, hunger and a global energy crisis following hard on the heels of the COVID-19 pandemic, with the poorest suffering the worst impacts.

These challenges are all symptoms of long-term, underlying megatrends. We are seeing threats emerge at an unprecedented scale and pace. Meeting these challenges head-on will require all the resources at our disposal.

For a successful transition to a more stable and resilient global economy, we need more than simple, short-term “emergency measures”. Accelerating progress towards Sustainable Development Goal (SDG) 9 – encompassing industry, innovation and infrastructure – has never been more crucial and requires a new way of thinking about industrial strategies.

The SDGs provide the blueprint to address major global challenges, from climate change to hunger, from poverty to inequality. They do so by promoting social and environmental interests alongside sustainable economic growth. For future industrial strategies, we must work together and build upon five main pillars, detailed below.

Building stability and resilience into the world economic system requires a closer look at the functioning of the global supply chains that underpin the modern industrial landscape. Globalization has allowed every country or region to share in the value chain to some extent, using their strengths and competitive advantages.

However, recent crises have highlighted the need to balance efficiency with some degree of local or regional flexibility. We help member states build domestic production capacity. It has strengthened our bilateral and regional partnerships with suppliers and markets. However, we need more cooperation with the private sector to ensure fairness, resilience and sustainability throughout entire supply chains. We must ensure that producers in developing countries get a fair deal and that scarce resources are preserved. We need to create a buffer against the next disruptive event, whatever it may be.

While some disruptions are destructive, others can bring extraordinary opportunities. We are in the midst of the Fourth Industrial Revolution. Advanced digital technologies are completely changing how goods are manufactured, how people work and even how we consume products.

Real-time monitoring, connected devices and machine learning are turning the factory floor into a self-optimizing system, continuously improving efficiency and productivity. This is not happening everywhere though, with smaller firms and those primarily serving domestic markets, especially in the least developed countries, being left behind. It is imperative that these technologies are spread more widely, but the successful adoption of advanced technologies will depend on the development of capabilities and supporting infrastructure.

UNIDO (United Nations Industrial Development Organization) has a pivotal role in bringing “smart” manufacturing practices to developing economies, especially enabling innovation in the SME sector by providing technical assistance, facilitating knowledge transfer from early adopters and brokering public-private investment partnerships. Future industrial strategies should foster innovative industrial environments.

These technological advances will not replace human skills, but they will change the mix of skills required by manufacturers. In fact, insufficient skills development is cited as one of the biggest obstacles to firm performance across multiple regions and sizes.

There are many ways to approach this issue, from improving links between employers and training providers to expanding on-the-job training and broadening the demographic base of the manufacturing workforce. Human capital continues to underpin industrial productivity, and manufacturing continues to be a source of well-paid, rewarding work.

UNIDO is focused on growing a workforce which is fit for the future, and that includes vulnerable and marginalized groups, for example, by promoting women’s inclusion in technical jobs through partnerships with STEM education providers and facilitating knowledge transfer to developing countries through skills partnerships and active participation in global supply chains.

Resilience also depends on environmental sustainability and avoiding the worst impacts of climate change. A green industrial strategy is critical in addressing climate change by decoupling economic growth from carbon-intensive activities.

UNIDO works with member states to explore technological solutions for reducing emissions and facilitating investment in sustainable energy and infrastructure. For example, we lead a network of international initiatives to hasten the shift away from fossil fuels in manufacturing by reducing energy waste, switching to greener fuels and promoting markets for low-carbon industrial products such as green steel and cement.

At the heart of the Global Agenda 2030 is the imperative of ensuring the well-being and prosperity of all. This implies that businesses should think beyond shareholders and ensure they consider the needs of all stakeholders – including local communities, customers, workers and future generations.

This implies a range of improvements to current practices. These include the use of technology to boost worker safety and well-being, as well as exploring new forms of business ownership and governance. Governments too have a role to play in ensuring that industrial policy incentivizes responsible practices in sourcing, production and waste management.

I call on local and international organizations to help firms access funding to modernize their operations, phase out harmful practices and, crucially, find viable ways to participate sustainably in the future economy.

The global nature of industrial production networks, as well as the scale and complexity of the challenges we face, mean that we will all need to work together to bring about lasting change.

This is why UNIDO and the World Economic Forum have established a mechanism for partnership, collaboration and exchange, where the best minds can share knowledge and ideas. Working together, we can find synergies and new ways forward. The vast experience and knowledge networks of the World Economic Forum and UNIDO offer the best supporting framework for achieving progress by innovation.

At UNIDO, we are proud to continue working with the World Economic Forum to facilitate new partnerships and approaches for a new industrial strategy that supports people and the planet alongside economic growth and prosperity. Together we can build a better world.

If we harness our collective will, we can create a better future.

The Future of Industrial Strategies is a World Economic Forum initiative ran in collaboration with the United Nations Industrial Development Organization (UNIDO) and the Cambridge Industrial Innovation Policy (CIIP).

Key messages from this blog are drawn from 'The Future of Industrial Strategies: Five Grand Challenges for Resilient Manufacturing' paper, published as part of the World Economic Forum's Future of Industrial Strategies Initiative, a World Economic Forum initiative run in collaboration with the United Nations Industrial Development Organization (UNIDO) and Cambridge Industrial Innovation Policy, University of Cambridge.