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Drivers of overall economic growth

Inclusive and sustainable industrialization can unleash dynamic economic forces that generate employment as well as facilitate international trade. Innovation and technological progress are key to finding lasting solutions to both economic and environmental challenges. Investments in resilient infrastructure – be it transport, irrigation, energy, or ICT – are crucial to empowering communities and achieving sustainable development. It has long been recognized that growth in productivity and incomes as well as improvements in health, education, and general well-being require infrastructure investments.

Despite the close link between the goals summarized by SDG 9 and global progress towards sustainable development, the world still has a long way to go to fully tap this potential.

Especially in least developed countries (LDCs) investment in research an innovation, infrastructure, and the development of their manufacturing sectors need to be scaled up if they are to meet the 2030 target. The price of inaction is high: Eradicating poverty would be more difficult, given the industry’s role as a core driver of the global development agenda. Failing to improve infrastructure and promote technological innovation could translate into poor health care, inadequate sanitation, and limited access to education.

The Covid-19 crisis has accelerated the digitalization of many businesses and services including teleworking systems, access to healthcare and education, and delivery of essential goods and services. Information and communication technologies (ICT) have thus been at the forefront of the response. As the pandemic reshaped the way we work, communicate, educate, and receive and deliver essential goods, it has never been more important to bridge the digital divide for the 3.6 billion people who remain offline (81% of the population in LDCs), unable to access online education, work remotely, or gain access to critical health advice. Even once past the acute phase of the Covid-19 crisis, governments will depend on infrastructure investments to accelerate economic recovery, create jobs, and stimulate investment.

Targets and progress

• Develop reliable, sustainable, and resilient infrastructure, including regional and across borders, to support economic development and human well-being. This target includes indicators such as road access for rural populations as well as passenger and freight numbers for railway and air transport. Making infrastructure resilient to disasters and climate change will require an additional investment of $434 billion per year, as highlighted by a 2019 UN economic and social survey of Asia and the Pacific. This sum may need to be even greater in some subregions, such as the Pacific small island developing states. The airport industry, an important driver of economic development, faced the steepest decline in its history in the first five months of 2020, with a 51% drop in airline passengers due to the global lockdowns.
• Promote inclusive and sustainable industrialization and significantly raise the manufacturing industry’s share of employment and GDP contribution in line with national circumstances, i.e. double its share in least developed countries (LDCs). While the manufacturing industry’s value added amounted to 20.66% of the GDP in Germany for example, it made up only 1.96% of the GDP of Sierra Leone in 2017. Global manufacturing growth has been steadily declining, even before the outbreak of the COVID-19 pandemic. The pandemic is hitting manufacturing industries hard and causing disruptions in global value chains and the supply of products.
• Increase the access of small-scale enterprises, particularly in developing countries, to financial services such as affordable credit, and integrate them into value chains and markets. Little data seems to exist to measure the progress on this target. With regards to small scale industries’ access to affordable lines of credit, Latin America and parts of South East Asia appear to do better than most of the African countries.
• Upgrade infrastructure and retrofit industries to make them sustainable. All countries are expected to act in accordance with their respective capabilities regarding increased resource-use efficiency (e.g. CO₂ emissions per unit value added) and greater adoption of clean and environmentally sound technologies and industrial processes.
• Enhance scientific research, encourage innovation, and upgrade the technological capabilities of industrial sectors in all countries with a focus on developing countries. This increase is reflected in public and private R&D spending as well as the number of researchers per million inhabitants. Globally, investment in R&D as a proportion of GDP increased from 1.5% in 2000 to 1.7% in 2015 and remained almost unchanged in 2017 but was only less than 1% in developing regions.
• Facilitate sustainable and resilient infrastructure development in developing countries through enhanced financial, technological, and technical support to African countries, LDCs, landlocked developing countries and small island developing states (SIDS).
• Support domestic technology development, research, and innovation in developing countries by ensuring a favourable policy environment for industrial diversification and value addition to commodities. Manufacturing value derived from high-tech and industry and innovative outputs leads to a higher value added.
• Increase access to ICT and strive to provide universal and affordable access to the internet in LDCs. Impressive progress has been made in mobile connectivity with almost the entire world population lives in an area covered by a mobile network (it is estimated that in 2019, 96.5% were covered by at least a 2G network) and more than half of the world’s population currently has access to the internet.

The local perspective

The critical success factor that enabled the UAE’s economic development has been the strategic investment of oil revenues to create a physical and social infrastructure-base capable of serving as a catalyst for the future development of the country. This enabled the country to navigate the challenge of being a natural resource economy exclusively based on oil. Innovation through environmentally sustainable industrialization is an area in which the UAE has particularly excelled recently. For more than a decade the World Economic Forum’s Global Competitiveness Report (GCR) has classified the UAE as an innovation-driven country. It was ranked fourth out of 138 countries for the overall quality of infrastructure, and among the top five in road quality, port infrastructure, and quality of air transport infrastructure in the 2017/18 GCR.

The UAE recognizes industrialization as the key to economic development. According to The Annual Economic Report 2015 produced by Ministry of Economy, the manufacturing sector was the third highest sector by percentage of employees hired during the year 2013 (11.6%).  Apart from traditional manufacturing, the UAE also actively encourages technology-supported manufacturing such as 3D printing.

In the world’s most successful and dynamic economies, competitiveness and innovation are concentrated in clusters. A country’s ability to produce high-value products and services and support high-wage jobs correlates with the creation and strengthening of such clusters. The UAE has focused on developing several clusters, varying from renewable clean technology (e.g. Masdar), to media (e.g. twofour54 media and production in Abu Dhabi, Media City Dubai), and finance (e.g. DIFC). The UAE ranks first in the state of cluster development according to the 2017 Global Talent Competitiveness Index. The National Innovation Strategy unveiled in 2015 targets seven sectors: renewable energy, transport, education, health, technology, water, and space. In the same year, the government launched the Fund to Finance Innovation with a value of AED 2 billion, a federal initiative designed to provide financing solutions for innovators across various sectors within the UAE.

Corporate engagement opportunities for SDG 9

Business relies on materials, resources, labour, and service support from different places and needs to access them efficiently, which is why outdated or insufficient infrastructure poses challenges and technology becomes increasingly important.  The fact that basic infrastructure and transportation, supporting ICTs, and other related services for proper business conduction are still not universally available, hinders economic growth and societal progress in affected regions.

This, however, presents an opportunity for businesses. By committing to sustainable industrialization and promoting innovation across company operations, businesses can contribute to development efforts in the regions in which they operate through upgrading or retrofitting local infrastructure, investing in resilient energy and communications technologies and making these technologies available to all people, including marginalized groups. Businesses can expand the geographic reach of R&D facilities by bringing R&D capabilities to developing countries. Global companies can also promote inclusive infrastructure development by bringing valuable financial services and employment opportunities to smaller and/or minority-owned businesses.

Case study: Acciona

ACCIONA is a global company with a business model based on sustainability, active in the fields of renewable energy, infrastructure, water, and service solutions for operations and maintenance. ACCIONA set up its first Middle East office in Dubai in 2008.

The water business line of ACCIONA has permanent facilities in Dubai and Fujairah. ACCIONA was involved in designing, building, and operating an enlargement to the large-scale seawater desalination plant in Fujairah with a capacity of 136,000m³/day. Using reverse osmosis technology, the plant provides drinking water for the consumption of 600,000 inhabitants.

Through its construction business line, ACCIONA has designed and built the extension of the Red Line to the Expo 2020. The project involved the construction of a 15 km long line branching off the existing red line at the Nakheel Harbour & Tower station and connecting it to the future Expo 2020 site. The metro extension consists of seven stations, including an interchange at Nakheel Harbour and an iconic metro station at the World Expo site. The complex project includes and approximately 2.5 km long tunnel perforated by a tunnel boring machine, 1km of open-cut route and 11.5 km of elevated viaduct metro line.

The industrial business line of ACCIONA is involved in the construction of the world’s largest photovoltaic plant in Dubai, the Mohammed Bin Rashid Al Maktoum Solar Park (Phase III). The new clean energy generation plant will have a surface area of approximately 17.8 km² and will boast over 3 million photovoltaic panels with trackers (mechanical devices that can orient the panels) with a peak capacity of 1054 MW at project completion. Once operational, the facility will prevent atmospheric CO₂ emissions corresponding to approximately 1.4 million tonnes per year.

ACCIONA executes its sustainability strategy through a Sustainability Master Plan, a road map containing all the initiatives of the Company in this field. The aim of ACCIONA is to lead the transition towards a low-carbon economy, bringing quality criteria and innovation processes to all projects in order to optimize the efficient use of resources and respect the environment, with the ambition and determination to become a carbon-neutral company from 2016 onwards. This commitment has been ratified by the inclusion of the company in the world’s top sustainability indexes, such as the FTSE4Good, MSCI Global Climate Index, CDP Climate A List 2017, and CDP Water A List 2017.