Building Future-ready industries to turn challenges into sustainable solutions.

 

The world faces a stark reality today. Despite notable strides in poverty reduction between 2000 and 2015, progress has slowed significantly. By 2022, the number of people lifted from extreme poverty compared to 2013 was only one-third. Currently, around 10 per cent of the global population—nearly 700 million people—still live in extreme poverty while nearly 800 million suffer from chronic hunger. The ambitious goals of eradicating extreme poverty and achieving zero hunger by 2030 now seem increasingly unattainable, especially in developing countries, where the impacts of recent crises, including the COVID19 pandemic, armed conflicts, and climate change, have further exacerbated inequalities. Sub-Saharan Africa, in particular, continues to grapple with deeply entrenched challenges, with poverty more pervasive than it has been in decades. The labour market presents an equally troubling picture. Although some recovery from the COVID-19 crisis has been reported, a notable jobs gap6 of 11.1 per cent persists, affecting 435 million people globally. Gender disparities are particularly pronounced, with women in low-income countries (LICs) facing a jobs gap of 24.3 per cent, compared to 17.4 per cent for men. Additionally, population growth and migration in developing countries, especially in Africa, have further intensified the need for job creation. Many of these regions experience high birth rates and a rapidly growing youth population, yet they often lack the necessary infrastructure and education systems to harness the potential demographic dividend. At the same time, there is growing pressure on global supply chains (GVCs), which will have a considerable impact given that around 80% of world trade relies on these interconnected networks of production, distribution, and logistics. In recent years, GVCs have experienced severe disruptions due to shortages and price increases (including energy, materials, food and key components). These challenges, exacerbated by the pandemic and geopolitical tensions, have forced many firms to find new suppliers in different locations. Meanwhile, the world is consuming natural resources at unsustainable rates, with the extraction of raw materials tripling over the past five decades. High-income countries consume six times more resources and generate ten times the climate impact compared to LICs. This unequal distribution of resource consumption has profound implications for global development, highlighting the urgent need for responsible sourcing practices and sustainability standards that minimize environmental harm while promoting local development in LICs. Food insecurity poses a significant challenge globally. As consumer preferences shift towards more sustainably produced, higher-quality food, demand for affordable options in poorer regions remains urgent. Over 1.7 billion people in urban and peri-urban areas are currently experiencing food insecurity, while more than 500 million resource-poor smallholder farmers in developing countries are struggling to increase productivity. The need for investment in sustainable agricultural practices is clear. The growing scarcity of essential resources such as water, land and energy disproportionately impacts developing countries, placing an even greater strain on food production. To meet global demand by 2050, food production must increase by 70%. Agro-industries have the potential to transform agricultural practices, enhance food availability, and generate jobs, but require modern infrastructure and better integration into value chains to meet rising global demand. Climate change further complicates the current situation, disproportionately impacting LICs, with projections indicating that they may experience annual GDP losses of 1% due to climate-related disasters – five times more than high-income countries. While energy is critical to drivingindustrial growth and economic development, 685 million people remained without access to electricity in 2022; and population growth in many regions threatens to outpace the expansion of Energy infrastructure. Additionally, energyproduction, which is largely dependent on fossil fuels, contributes approximately 75 per cent of  global greenhouse gas (GHG) emissions, and is linked to over eight million deaths annually due to air pollution. The impact of climate change is particularly severe for developing countries, especially Small Island Developing States (SIDS), which face heightened risks from rising sea levels, droughts, floods, and other extreme weather events associated with climate change. Industry, in turn, remains the largest global consumer of energy, requiring more than twice the amount of energy consumed by the commercial, residential and transport sectors combined. Energy-intensive industries such as steel industry, cement industry and chemicals industry account for about 25% of global CO2 emissions or around 70% of industrial emission. Despite the urgency of the situation, only one-sixth of global energy currently comes from low-carbon sources, and only 15% of renewable energy investments currently directed towards developing countries, with only 2% allocated to Africa. Without increased support, these regions risk being left behind in the energytransition. In response to these pressing challenges— poverty, hunger, energy transition and climate action—the world and in particular developing countries need to accelerate their economic growth. To achieve Sustainable Development Goal(SDG) 8, the per capita gross domestic product (GDP) in least developed countries (LDCs) should grow by at least 7% annually, a target that remains far from being met. The type of growth needed is not just any growth, however; it must be compatible with the sustainability of our planet and aligned with the SDGs. This means pursuing economic activities that not only generate income and jobs but also preserve Earth's resources for future generations. Industrial development is essential to achieving sustainable growth. In some emerging countries, industrialization has proven transformative, lifting millions out of poverty, generating jobs, and driving long-term economic growth. It has been the backbone of development for many countries, offering a pathway for modernizing economies and improving living standards. However, not all industrialization pathways lead to sustainable outcomes. Industrial development must be socially inclusive, environmentally sustainable, and guided not only by short-term profits but also by long-term objectives. 

For industry to thrive, progress must be driven by innovation. Several key enablers are essential for this: 

first, industrial development depends on the people who fuel progress, i.e. education, skills development and training are indispensable.

Second, infrastructure is crucial for industries to flourish, including access to energy, water, telecommunications and transport networks. 

Third, innovation, particularly in digital solutions and advanced clean production technologies, is key to ensure that industrial processes become more efficient and environmentally sustainable. 

Fourth, industry needs access to energy produced and consumed in ways that mitigate climate change. Fifth, the industrial sectors in developing countries can only grow through fair competition, equal trade and access to global, regional and local markets. This requires the implementation and adaptation of regulatory frameworks to ensure a level playing field for developing countries. 

Sixth, the success of a country’s industrial sector hinges on forward-looking industrial policies that outline a strategic blueprint for industrial development, committed to channelling public and private investments towards coordinated action to respond to megatrends and seize new opportunities. 

Finally, the conditions for investment in developing countries’ industries must be enhanced through improved legal frameworks, risk mitigation strategies and guarantees to attract and sustain capital. While industry, with support from the government and the development community, particularly in developing countries, has to go the extra mile to create enabling conditions for sustainableindustrial growth, they must also be aware of the tremendous opportunities that are available and that are unique to each country and set of development policies. 

They include, among others:

 i) Agro-industry: as global demand for food and agricultural products continues to rise, developing countries have highly favourable conditions, including abundant arable land for expanding agricultural production;

 ii) Light manufacturing: locally produced tools, equipment and manufactured goods, for example for construction, infrastructure development and many industrial sectors, can reduce reliance on otherwise costly imports; 

(iii) Pharmaceuticals: demand for affordable medicines is growing, especially as global supply chains face disruptions; 

(iv) Energy: industries must reduce emissions and local solutions need to be developed to generate energy from renewable sources such as solar, biomass and hydrogen. Technologies need to be explored to reduce CO2 emissions from traditional energy sources; 

(iv) Mining: many developing countries are rich in critical minerals and rare earth metals which are essential for modern technologies, such as semiconductors and e-mobility. There is also potential to develop local capacity for value addition in the equipment and maintenance sectors;

(v) Digitalization: production processes can be connected and controlled smartly, saving resources and substantially increasing industrial productivity; 

(vi)Market development: developing countries offer substantial potential, particularly in terms of traditional and local products, including textiles, furniture, decoration items, handicrafts, food and health products; and finally 

(vii) Value addition to local products: there is tremendous potential to substitute costly imports, and promote the export of higher value-added industrial products. 

This paper explores The challenges and opportunities associated with industrial developmentin depth; it is structured as follows: 

Section 1 presents projections and scenarios on how theworld may look by 2050, given the current global challenges we face. 

Section 2 focuses on the Future of industry, by examining key industrial megatrends such as the energy transition, digitalization, GVC reconfiguration, and demographic shifts, along with their implications for industrial development. 

Section 3 discusses solutions for promoting sustainable industrial development, with a special focus on the needs of developing countries. 

Section 4 concludes the paper and offers final reflection.

DEVELOPMENT PROJECTS

CLEAN ENERGY TRANSITION IN EGYPT

EFFICIENT ENERGY PRODUCTION IN UKRAINE