Green Tech: Coherent Policy Action Needed for Developing Countries to Reap the Benefits

A new United Nations Conference on Trade and Development (UNCTAD) report calls on governments and the global community to ensure consistency across international agreements on trade, intellectual property and climate change to close the green tech gap.

Green technologies – those used to produce goods and services with smaller carbon footprints – are growing and providing increasing economic opportunities but many developing countries could miss them unless national governments and the international community take decisive action.

UNCTAD’s recently published Technology and Innovation Report 2023 warns that economic inequalities risk growing as developed countries reap most of the benefits of green technologies such as artificial intelligence, the Internet of Things and electric vehicles.

“We are at the beginning of a technological revolution based on green technologies,” UNCTAD Secretary-General Rebeca Grynspan said. “This new wave of technological change will have a formidable impact on the global economy. Developing countries must capture more of the value being created in this technological revolution to grow their economies.”

Ms. Grynspan added: “Missing this technological wave because of insufficient policy attention or lack of targeted investment in building capacities would have long-lasting negative implications.”

Widening Tech Gap

UNCTAD estimates that the 17 frontier technologies covered in the report could create a market of over US$9.5 trillion by 2030 –about three times the current size of the Indian economy. But so far, developed economies are seizing most of the opportunities, leaving developing economies further behind.

The total exports of green technologies from developed countries jumped from around US$60 billion in 2018 to over US$156 billion in 2021. In the same period, exports from developing nations rose from US$57 billion to only about US$75 billion. In three years, developing countries’ share of global exports fell from over 48% to under 33%.

UNCTAD’s analysis shows that developing countries must act quickly to benefit from this opportunity and move to a development trajectory leading to more diversified, productive and competitive economies. Previous technological revolutions have shown that early adopters can move ahead quicker and create lasting advantages.

The report includes a “frontier technology readiness index” that shows that very few developing countries have the capacities needed to take advantage of frontier technologies. These include blockchain, drones, gene editing, nanotechnology and solar power.

Green frontier technologies such as electric vehicles, solar and wind energy, and green hydrogen are expected to reach a market value of US$2.1 trillion in 2030 – four times greater than their value today. Market revenues for electric vehicles could rise five times to reach US$824 billion by 2030 from today’s value of US$163 billion.

The index ranks 166 countries based on ICT, skills, research and development, industrial capacity and finance indicators. It’s dominated by high-income economies, notably the United States, Sweden, Singapore, Switzerland and the Netherlands.

Although developing countries are the least prepared to use frontier technologies, several economies in Asia have made important policy changes that have enabled them to perform better than expected according to their GDP per capita.

India remains the greatest overperformer, ranking at 67 positions better than expected, followed by the Philippines (54 positions better) and Vietnam (44 better).

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