Issues

The large disparities in income and social development between developed and developing countries are rooted in the considerable differences in their industrial development and use of technology, and the resulting gaps in their productivity. There are serious differences among developing countries as well, with some countries making great leaps forward and others appearing to be trapped in the low-income category. Countries with high levels of investment in physical capital instead of in technology run the risk of facing diminishing returns and slow growth. Ultimately, weak productivity growth in developing countries exacerbates poverty, energy deficiency and environmental debt, to name but a few significant implications. Conversely, investment in technology guarantees continuous productivity growth and potential for inclusive and sustainable industrial development. 

It is therefore important to focus on the factors that are involved in increased technical efficiency (more output per input or more resource productivity) and technological change, both of which are components of productivity growth. Typically, the most dynamic sector for making advancements in this sense is the manufacturing sector. Apart from a few resource-rich, particularly oil-rich, countries, no country has been able to eradicate poverty without industrial development. 

A significant reason behind developing countries’ weak productivity is the low rate of innovation. This may be due to the lack of skilled labour and incentives, and it is often made worse by an unsupportive environment that lacks a coordinated National System of Innovation (NSI), which promotes investment on innovation, decreases the constraints on the creation of new knowledge and technology, and boosts the rates of adoption and adaptation of existing technologies. 

Many, if not all, developmental problems have solutions. However, these solutions do not necessarily exist where the problems are present, making it necessary to transfer technology and solutions from where they exist to locations where they are needed, and make them available for wider use in the country and region. 

The solution

To address these inequalities, UNIDO conducts a technical cooperation programme with a focus on Science, Technology and Innovation (STI), which measures and analyses gaps in technology, and works toward decreasing them in a systematic and sustainable fashion. 

The programme’s primary target group for direct intervention is small- and medium-sized enterprises (SMEs) and their business associations in all developing countries, but, through its systemic interventions, it also indirectly benefits large enterprises. 

In addition to promoting productivity growth, the adoption of new technologies allows for a less energy-intensive and increasingly resource-saving production. While in the short term this may cause structural change and thus transitory unemployment, in the long term productivity growth generates more and different types of employment. 

Since higher technology levels are seen to promote the Inclusive and Sustainable Industrial Development (ISID) of countries, UNIDO also supports enterprises with landing the necessary investment to acquire new technologies. In the case of Foreign Direct Investment, the transfer of technology often happens automatically. 

Approach

The STI programme serves a dual function: it provides technical assistance and acts as a global forum. 

Technical assistance is used to upgrade production processes, machines and skills of SMEs; to build capacity on intellectually property rights (IPR) and innovation; and to provide access to advanced technologies through technology transfer.  Generally, technology transfer occurs in a North-South-South direction. For instance, by channelling technologies through UNIDO’s International Technology Centres (ITCs), technology coming from the North is adapted to the contexts and needs of developing countries in the South, and then further diffused from one southern developing country to another. Technical assistance also covers making use of advanced technologies such as bio- and nanotechnology to address, for example, the lack of access to clean water. In the most advanced developing countries the production of advanced technologies is also considered. 

As a global forum, UNIDO stays abreast of advancements in the field and helps share this knowledge with others. Global forum activities include the collection of information on SME innovation and NSI as well as on productivity performance at the micro, meso and macro levels; the analysis of such data; and the presentation of its results and derived policy recommendations in reports, journals and conferences. To this end, the STI Group organizes a range of training sessions, workshops and conferences to stimulate discussion, peer reviewing and demonstrations. 

To summarize, UNIDO’s STI Group runs a programme that seeks to enhance SMEs’ productivity and international competitiveness in the short- and long-term. This is done by improving the quality of production inputs—labour, tangible and intangible assets and intermediates—making available appropriate advanced technologies, and improving factors—internal and external to SMEs—that allow for a faster rate of innovation and an effective technology transfer. The STI Group works in close cooperation with UNIDO’s network of International Technology Centres (ITCs) and Investment and Technology Promotion Offices (ITPOs), which also promote technological upgrading and South-South Cooperation.