2nd Statement by UNIDO At The Just Concluded SME Summit in China

Posted On: Mon 29 Oct 2018 By TCR NEWS

The 15th China International Small and Medium Enterprises Fair (CISMEF)

 

Guangzhou, Guangdong Province, China

 

Statement by UNIDO, 10 October 2018

 

Your Excellency, Mr. Wang Jiangping,

Vice-Minister of Industry and Information Technology of PRC

Your Excellency, Mr. Chen Liangxian,

Vice-Governor of the People’s Government of Guangdong Province,

 

Mr Adbullah Al Saleh, Under-secretary of Foreign Trade at the Ministry of Economy of UAE

 

Distinguished Guests,

Dear Colleagues,

 

Last month UNIDO was hosting at the Vienna International Centre a debate on “Industry 4.0—the New Industrial Revolution”. The keynote speaker was a prominent international figure from southeast Asia who started his address with remarks on the concept of Total Factor Productivity. Total Factor Productivity, or the Solow Residual, is this unexplained dividend that boosts economic growth over and above concomitant increases in factors—land, labour and capital.

 

Empirical evidence reveals for instance the labour-augmenting impact of technology: when learning to manipulate new machines, factory workers develop new skills, new ideas that raise their productivity beyond the productivity gains brought by the new technology.  

 

Hardly three decades later, how much of these ideas remain relevant today when factors of production are increasingly intangible and much economic value is created in cyber-space amongst anonymous actors thousands of miles apart? That is the transformational power of the new industrial revolution that has taken the world by storm, spawning in its wake a brave new world of global markets where consumers and producers transact in unprecedented ways to exchange novel goods and services.

 

 

The theme of the 15th China International SME Fair that brings us together today is therefore very timely: “NewLandscape in All-around Opening-up, New Future in the Industry” is a topic that dominates political and business agenda alike around the world, and where the combined knowledge and resources of the Ministry of Industry and Information Technology of China, the Regional authorities of Guangdong Province, the Government of the United Arab Emirates and UNIDO can offer a positive contribution to the debate.As a matter of fact, UNIDO and the UAE have been working together for several years now in the organization of the Global Manufacturing and Industrialization Summit, a think tank that explores such burning subjects as the future of manufacturing.

 

As a technology-oriented Organization, we at UNIDO are rather optimistic in our assessment of the potential of the New Industrial Revolution. New materials and robotics, nanotechnology and digital printing, big data and the internet of things, biotechnology and precision farming open new roads to Agenda 2030 and support virtually every one of the 17 Sustainable Development Goals: they raise the prospect of a better world with reduced inequalities, greater food security and health, new skills and new types of jobs, sustainable cities and a more responsible management of the eco-system.

 

Allow me to briefly outline what lies ahead in the different fields of technical assistance by UNIDO. As part of our mandate to promote inclusive growth, we encourage entrepreneurship and value addition in rural communities across the developing world. But demographic growth and traditional transfer of land from one generation to the next result in individual plots that are too small for mechanization and the systematic management of water and agro-chemicals. Smart agriculture, however, where sensors measure soil moisture, nutrients and fertility or the output of every plot pave the way for large combines and an ecological use of resources.

 

Global e-trade platforms turn smallholder farmers into small-scale entrepreneurs connected to domestic and regional markets of fresh agricultural produce.Likewise the Internet of Things and machine-to-machine communications have created a dense network of over six billion devices generating data used to monitor customer preferences, trace in real time the shipment of goods, reduce warehousing costs through just-in-time delivery, or optimize energy consumption in household and industrial processes.

 

Biotechnologies bring about new materials that degrade naturally past their useful shelf-life, that are directly amenable to processing into pulp and paper, fabrics or food. Enzymes offer an organic alternative to chemicals in a variety of industrial processes, bacteria are used in mosquito containment and in the remediation of contaminated soils. Bio-similars offer an alternative to synthetic therapeutic drugs in countries endowed with a rich biodiversity. Bio-markers and isotopic signatures support industrial symbiosis and bring closer the advent of the circular economy.

 

Finally, blockchain technology creates a secure, intermediary-free exchange platform where independent power producers feed the electricity network with clean energy produced from renewable sources, whether the rooftop of a home, an offshore wind turbine,  … or the battery of an electric vehicle during idle time. Smart grids made of digital sensors and control systems instantaneously optimize load factors and make sure that generation devices always operate at the peak of their efficiency, thereby contributing to decoupling economic growth, resource use, carbon emissions and anthropogenic climate change.

 

The New Industrial Revolution is in several ways similar to international trade, in that it expands the economic space of transactions amongst agents, buyers and sellers, producers and consumers, farms and firms. Both create new opportunities for socio-economic progress, both also raise new challenges. They reshape economic structures, they bring about transformational change.

 

A major difference though is the pace of transformation. While international trading routes—such as the silk road—have existed for centuries, steadily shaping comparative advantages and the global distribution of production, the interconnection amongst people and machines is a relatively new phenomenon that is progressing at a breath-taking pace. It took the civil aviation in the past century 70 years to reach 50 million customers; in contrast, virtual networks of 50 million nodes are now created in a matter of days.

 

The speed of transformation defies imagination. How can public institutions such as UNIDO support the process? How can we—all of us—make sure that it does not widen the digital divide, but instead benefits small and medium enterprises and brings about the socio-economic progress foreseen in Agenda 2030? From the perspective of UNIDO, let me focus on two aspects that typically underwrite the role of a public institution: a matter of global governance, and a matter of infrastructure.

 

It is naïve to posit that increased competition amongst countries can only result in efficiency gains and ultimately, global welfare improvements. Lowering national borders to facilitate flows of goods, services, people and capital can just as well bring about labour exploitation, sub-standard or fake products, violation of intellectual property rights, tax evasion. Hence the paramount importance of a rule-based international trading systems, where firms and countries agree to play by the same rules, apply the same standards, etc.

 

Likewise the digitalization of economies and societies sends to the cloud staggering volumes of data, often of sensitive nature. Personal data can be diverted and misused for political or criminal purposes in a cyber space that knows no borders. Or simply, data on individual preferences, travels, purchasing patterns and credit card use can be mined for commercial benefits without the user’s consent or even, awareness and prompted the EU General Data Protection Regulation in force since 25 May 2018.

 

The advent of online, intermediary-free financial transactions opens new avenues for small, fast, efficient exchanges amongst small enterprises or even, prosumers. Yet the platform for all the complex security of blockchain algorithms is evidently not immune to hacking, has been used to finance terrorism and cross-country criminal activity. The intense and often irrational speculation around cryptocurrencies is a source of dangerous volatility; it has wrecked retirement plans and eroded family estates around the world.

 

E-commerce can spur small-size entrepreneurship and distribute production patterns; yet when an essentially virtual platform with hardly any physical assets reaches a market capitalization of a trillion dollars, it can and will diversify into warehousing, logistics, banking and other services and raises serious risk of market dominance and monopolistic practices.

 

These few examples illustrate the urgent need for tighter global governance as the New Industrial Revolution unfolds. Let me take the last example to conclude with brief remarks on infrastructure. 40-50,000 of the 70,000 villages across Thailand have access to broadband internet; how many of the villages across Niger are connected to the internet? Norway topped the Human Development Index in 2017 (out of 189 entries), and figured that year in 9th position in the Huawei Global Connectivity Index. In contrast, Ethiopia occupies the last position in the 79-country Global Connectivity Index, and ranks 173rd in the Human Development Index. Clearly there is some correlation between connectivity, and socio-economic progress.

 

The Internet of Things and to some extent e-trade, rest on three pillars: sensors to collect data, control centres to process it, and a communication protocol to exchange information between them. Countries hindered by weak connectivity are at risk to trail further behind across the digital divide. Unlike her peer in Thailand, the smallholder farmer in Niger will not be able to sell fresh vegetables to nearby household through an e-trade platform as long as she is deprived of stable, secure internet access.

 

That is where the combined expertise, technology and resources of the Government of China and the UAE, and of UNIDO can make a tangible difference and help SMEs in low-income countries realize the promises of the brave new world ushered in by the New Industrial Revolution.

 

I thank you for your attention.

 

Philippe Scholtès

Managing Director

Programme Development

and Technical Cooperation

UNIDO Vienna, Austria  

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