Reduction of poverty through productive activities
The international community is committed to achieving the Millennium Development Goals (MDGs) by 2015, and, in particular, to halving the proportion of the world’s poor whose income is less than one dollar a day. The reduction of poverty through productive activities supports the efforts of developing countries in addressing this challenge. It also addresses the closely related MDG of promoting gender equality and empowering women as effective ways to combat poverty, hunger and disease.
As the primary driver of economic growth and employment creation, the private sector has a central role in poverty reduction and the achievement of the MDGs. Private sector led industrial development plays a significant role in bringing about the much needed structural changes that can set the economies of poor countries on a path of sustained economic growth. Industry provides a seedbed for entrepreneurship, promotes business investment, fosters technological upgrading and dynamism, improves human skills and creates skilled jobs, and through intersectoral linkages establishes the foundation for both agriculture and services to expand. All these factors contribute to sustained productivity improvements that can ensure pro-poor outcomes and contribute to increased living standards in poor countries.
Governments have a strong interest and a key role in regulating and facilitating the development of the private sector. At the same time, governments play a key role in ensuring that economic growth provides opportunities for the poor to engage in productive activities. In this context, the public sector must promote a policy and institutional environment that enables the private sector to flourish and become an effective driver of sustainable and inclusive growth.
To increase the impact of the development of the private sector on the reduction of poverty, UNIDO will support the efforts of developing countries to improve the business environment and lay the policy and institutional foundations for the development of a vibrant private sector, it will promote domestic entrepreneurship and in particular development of the entrepreneurial skills of disadvantaged groups, it will link domestic enterprises to international investment and technology flows, and it will facilitate access to resources and support services that small and medium enterprises (SMEs) require to become more competitive. Innovation, entrepreneurship and competition are important sources of productivity growth that, with appropriate policy and incentive structures, can bring about pro-poor market outcomes in the form of more sustainable jobs and incomes as well as affordable goods and services.
In developing countries, local SMEs are responsible for most of the economic activities that support productivity enhancement and poverty reduction. This is particularly the case with the agriculture-based economies in Africa and the LDCs, where the development of agro-based enterprises contributes to poverty reduction while at the same time enhancing productivity. In this context, building up and strengthening productive capacities through development of SMEs in competitive sectors takes a central role. The provision of affordable energy for productive use and income generation as well as the promotion of sustainable production in poor communities are essential elements of any sustainable economic development.
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Enhancing the capacity of developing countries and countries with economies in transition to participate in global trade is becoming increasingly critical for the economic growth of these countries.
The ability of enterprises in these countries to trade internationally depends increasingly more on their ability to enter into global value chains that are established by transnational corporations. On the one hand, this requires working on the supply side, enabling enterprises to manufacture products with high-export potential in the quantities and at the level of quality required by the markets. On the other hand, it requires evidence of market conformity, enabling these same enterprises to ensure that their products conform to the relevant international standards, in particular private buyer requirements, and technical requirements.
On the supply side, UNIDO will continue to support enterprises in their efforts to offer competitive, safe, reliable and cost-effective products in world markets. This requires identifying sectors and products that have competitive potential and are suitable for local value addition as well as analyzing and assessing trends in industrial performance at national, regional and global level, and formulating strategies and policies designed to improve industrial competitiveness and to overcome technical barriers to trade (TBT) and comply with sanitary and phyto-sanitary measures (SPS). UNIDO further assists developing countries and economies in transition upgrade their manufacturing processes in sectors with high-export potential to internationally acceptable levels and support the creation of export consortia, a specialized form of SME network as well as designing and implementing national and regional commodity-based trade capacity-building programmes, in cooperation with international partner agencies such as WTO, ITC, FAO and CFC.
With respect to conformity, UNIDO will continue to help enterprises comply with international standards and market requirements, and will assist countries that have recently acceded to WTO, or are in the accession process, to develop the conformity infrastructure needed, in particular, to fulfill the requirements and obligations under the WTO TBT agreement and the agreement on the Application of SPS measures. It will do so by developing capacities in national standards bodies to perform internationally-recognized product testing and calibration based on analyses of infrastructural and service gaps in metrology, testing and inspection services, and by developing accreditation institutions to accredit laboratories, system certifiers and inspection bodies.
UNIDO will also provide assistance to address the growing significance of private sector requirements for enterprise systems and product standards. Of particular importance are the standards regarding food hygiene and food safety (ISO 22000), but there are also other important international systems standards such as quality management (ISO 9001), environmental management (ISO 14001), and social accountability (SA 8000). It will also support producers in performing self-declarations of conformity such as the CE markings and others. Corporate social responsibility (CSR) is also an area where international buyers are increasingly requiring exporter compliance, especially in light of the international standard on social responsibility (ISO 26000).
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Energy and environment
Global industrial production and consumption are outpacing the renewal capacity of natural resources and the capacity of governments to manage pollution and wastes. While industrial growth has helped raise tens of millions of people out of poverty in many countries over the last decades, particularly in ever-growing urban agglomerations, it is evident that economic growth and urbanization have not come without a price.
This phenomenon is accompanied by inadequate or non-existent environmental and urban services, including recycling systems, wastewater treatment and sewage systems, drainage, water supply, sanitation, and solid waste management. Such deficiencies inhibit economic growth, place further stress on natural systems, and damage public health and the investment climate. They also constrain the potential for urban areas to contribute fully to economic growth.
International concern about global climate change is increasing the attention being given to these issues. The impacts of climate change may be very serious to developing countries, particularly Least Developed Countries (LDCs), many of which are ill-equipped to deal with the resulting effects on agricultural output, labour productivity, health and internal displacement.
Intensified competition for scarce resources, including water and energy, may not only amplify conflicts within the industrial context. Environmental degradation and climate change may also intensify already worrying trends, such as desertification, sea-level rise, more frequent severe weather events and shortages of freshwater, leading in the worst-case scenarios to civil and cross-border conflict and uncontrollable migration. Resource efficiency and low-carbon economic development can thus lessen the pressures and help to avert some important root causes of social conflict.
UNIDO has long recognized that environmental issues must be addressed and cleaner production methodologies must be promoted at a systemic level in industrial development. The promotion of resource efficiency requires a perspective and a decision-making process that simultaneously considers both economic value and environmental sustainability. Improved resource efficiency also applies to energy, where it reduces greenhouse gas emissions from energy generation and use, materials extraction and processing, transportation and waste disposal. Sustainable industrial energy strategies that include adoption of renewable energy sources, as well as energy efficiency, are thus key for addressing climate change through moving economies onto a lower-carbon path.
Against this background, UNIDO provides assistance in the following areas:
- Resource-efficient and low-carbon industrial production
- Clean energy access for productive use
- Capacity building for the implementation of multilateral environmental agreements
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