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Industrial Development Report 2016
“The Role of Technology and Innovation in Inclusive andSustainable Industrial Development”

Ludovico Alcorta
Director Research, Statistics
and Industrial Policy

United Nations University,Tokyo, 18th December 20152

Overview• Conditions for sustained growth• Conditions for inclusiveness• Conditions for environmentalsustainability• Policy principles to steer conditions3

Conditions to boost technology
and sustained growth• Identifying and nurturing growth enhancing sectors andactivities• Investing in human capital• Improving the functioning of innovation systems• Upgrading in domestic clusters• Participating and upgrading in global value chains• Optimizing contributions from foreign direct investments

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Investing in human capital• Technological capabilities are mainly related to the level ofeducation of population.
• Basic literacy is not enough but the full range of education.
• Technology specific skills are needed to absorb new technologies.
• Improved education curriculum.
• Vocational training.
• R&D expenditure5

Improving functioning of innovation
systems (I)6Improving functioning of innovation
systems (II)• Learning and innovation involve complex interactions between thefirms and their environment which includes the institutional andorganizational framework, infrastructure and institutions forknowledge creation.
• This should be reflected concretely into:– technical information services– extension services– quality control institutions– technological commercialization infrastructure.

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Participating and upgrading in global
value chains• Special Economic Zones (SEZs).
• Accessing GVCs
– thinning in– thinning out• Approaches to upgrading– vertical value chains– additive value chains– increasingly technologically sophisticated activities8

Conditions for technology to boost
inclusiveness• Type of innovation• Factor and skills endowment• International conditions• Social policies
9Type of innovation• Products innovation generates employment, process innovation
reduces jobs.
• Employment reducing effects of process innovations are often
mitigated by market forces themselves (e.g. markets and jobs fromnew sectors and new machines, lower consumer prices, moreinvestments etc.)• Use of “appropriate technologies” coherent with the resources
endowments of countries.

10Factors and skills endowment (I)• Developing and aligning skills with the needs of industry, including
on the job training and predictable career ladders;• Valorize entrepreneurship vocation of talented young people in low
and middle income countries• Entrepreneurial support should consider the level ofindustrialization11

Factor and skill endowment (II)12

Conditions for technology to boost
environmental sustainability• Market pull factors• Shifting to new and high tech sectors• Regulation and international agreements• Global value chains13Some environmental sectors such as waste are already booming

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A global deal for climate change shouldcontain…
• A generalized commitment of world countries to reduce
emissions with clear emissions caps.
• Mechanisms to price environmental externalities• Clear monitoring and evaluation systems• Punishment mechanisms in case of “free riding”
behaviors• Mechanisms to facilitate technology transfers (e.g. clean
development mechanisms)
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Policy principles to promote ISI technology

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A coordinated set of interventions17

Different policies at different stages of development

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MANY THANKS

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