UNCTAD report: Green innovations to help developing countries realize economic growth

03 / 04 / 2023

• Knowledge Bank
• news

The Technology and Innovation Report 2023 – issued by the United Nations Conference on Trade and Development (UNCTAD) – highlights the opportunities that green innovation – goods and services with smaller carbon footprints – offer developing countries to spur economic growth and enhance technological capacities.

The report analyses the market size of 17 green and frontier technologies, such as artificial intelligence, the Internet of Things and electric vehicles, and their potential to create jobs.

The report urges the international community to make global trade rules more supportive of emerging green industries in developing economies and reform intellectual property rights to facilitate technology transfer to these countries.

Now is the time for developing countries to capture more of the value being created in this green tech revolution – and use it to grow their economies, make them more resilient to shocks and reduce inequalities.

UNCTAD calls on their governments and business communities to invest in more complex and greener sectors, boost technical skills and scale up investments in the technology infrastructure needed to grow green industries.

Now is the moment for developing countries to take advantage of the high increases in productivity associated with this new technological revolution and catch up economically, while helping to protect the planet.

Missing this green technological wave because of insufficient policy attention or a lack of investment targeted at building skills and capacities would have long-lasting negative consequences.

The 17 frontier technologies covered in the report such as artificial intelligence, Internet of Things and green hydrogen already represent a $1.5 trillion market, which could grow to over $9.5 trillion by 2030 – about three times the current size of the Indian economy.

But so far, developed economies are seizing most of the opportunities, leaving developing economies further behind.

The total exports of green technologies from developed countries jumped from around $60 billion in 2018 to over $156 billion in 2021. In the same period, exports from developing nations rose from a similar starting line of $57 billion to only about $75 billion. In three years, developing countries’ share of global exports has fallen from over 48% to under 33%.

But few developing countries have the capacities needed to take advantage of frontier technologies, which rely on digitalization and connectivity. They include blockchain, drones, gene editing, nanotechnology and solar power.

The report assesses countries’ preparedness for frontier technologies. It presents a “readiness index” ranking 166 countries based on five “building blocks”: ICT deployment, skills, research and development (R&D) activity, industry activity and access to finance.

The index shows that countries in Latin America, the Caribbean and sub-Saharan Africa are the least ready to use, adopt or adapt to frontier technologies and are at risk of missing current technological opportunities.

In general, those most ready are high-income economies, notably the United States, Sweden, Singapore, Switzerland and the Netherlands. China, the most-ready developing country, ranked 35, followed by Brazil (40), India (46) and South Africa (56).

China’s lower-than-expected position, when compared to its capacities to produce and innovate in frontier technologies, is due primarily to urban-rural disparities in internet coverage and broadband speed.