As many countries around the world start to reap the economic benefits of using “green technologies” such as the Internet of Things, electric vehicles (EVs) and artificial intelligence, it is important that developing countries capture more of the value being created in this technological revolution to grow their economies.

Missing this opportunity owing to insufficient policy attention or a lack of targeted investment in building capacities would have long-lasting negative implications, the United Nations Conference on Trade and Development (Unctad) states in its ‘Technology and Innovation Report 2023’.

The intergovernmental body explains that green technologies are those used to produce goods and deliver services with smaller carbon footprints.

Unctad estimates that green technologies could create a market worth almost $10-trillion by 2030; however, developed economies have been seizing most of the opportunities, while developing economies are lagging behind.

The report finds that total exports of green technologies from developed countries have risen from $60-billion in 2018 to $156-billion in 2021.

In the same period, exports from developing countries rose from $57-billion to $75-billion.

The developing countries’ share of global exports of green technologies, therefore, fell from 48% to 33%.

Unctad’s analysis shows that developing countries must act quickly to benefit from the opportunities in this market, and accelerate their development trajectories to become more diversified, productive and competitive economies.

Previous technological revolutions have shown that early adopters can move ahead quicker and create lasting advantages, Unctad states.

The report further finds, through a frontier technology readiness index contained in the report, that very few developing countries have the capacities needed to take advantage of frontier technologies, including blockchain, drones, gene editing, nanotechnology and solar power.

Green frontier technologies, such as EVs, solar and wind energy, and green hydrogen, are expected to reach a market value of $2.1-trillion by 2030, which is four times its value currently.

The frontier technology readiness index ranks 166 countries based on information and communication technology (ICT) skills, research and development, industrial capacity and finance indicators. The index is currently led by high-income economies such as the US, Sweden, Singapore, Switzerland and the Netherlands.

Unctad finds that many economies in Asia have made important policy changes that enable them to perform better than expected on the index and according to their gross domestic product per capita.

The index shows that countries in Latin America, the Caribbean and sub-Saharan Africa are the least ready to harness frontier technologies, and are at risk of missing current technological opportunities.

South Africa currently ranks at 56 on the index, ahead of all its sub-Saharan African peers, but behind its Brics counterparts, with India ranking at 46, Brazil at 40, China at 35 and Russia at 31.

Unctad says developing countries need more proactive industrial, innovation and energy policies targeting green technologies.

Unctad technology and logistics director Shamika Sirimanne stresses that, not only do developing countries need to take long-term strategic action to build innovation and technological capacities to spur economic growth, but they also need it for increased resilience to future crises.

Sirimanne urges developing countries to ramp up efforts to boost technical skills and scale up investments in ICT infrastructure.

INTERNATIONAL SUPPORT

Unctad highlights that developing countries cannot take advantage of green technologies on their own, but that much of the success of their domestic policies will depend on global cooperation through international trade.

This will require reforms to existing trade rules to ensure consistency with the Paris Agreement to tackle climate change.

The report says international trade rules should permit developing countries to protect emerging green industries through tariffs, subsidies and public procurement, so that they not only meet local demand, but also reach the economies of scale that make exports more competitive.

Unctad notes that international support to transfer green technologies to developing countries is also critical.

To this end, the report proposes a similar application of principles that were invoked against the Covid-19 pandemic – when some countries were allowed to produce and supply vaccines without the consent of the patent holder.

This would offer manufacturers in developing countries quicker access to key green technologies.

It would also bode well, Unctad adds, if there were more support for regional centres of excellence for green technologies and innovation, and perhaps a multilateral fund to stimulate green innovations and enhance cooperation between countries.

The organisation elaborates that successful innovation systems create multiple incentives for companies and entrepreneurs to develop their own ideas and transfer them to practice; however, most developing countries lack the financial or management capacities to develop similar incentives.

Therefore, Unctad deems it a good idea for a multilateral challenge fund to be created, perhaps called “innovations for our common future”, that is funded by international organisations, donors and international philanthropy, to mobilise creative thinking and stimulate innovations that could respond to global challenges.

The next step would be to design a global green innovation competition, whereby projects are assessed to the extent at which they incorporate North-South and South-South science, technology and innovation cooperation for green technologies.

Moreover, Unctad suggests international trade and related intellectual property rules should provide more flexibility for developing countries to put in place industrial and innovation policies to nurture their nascent industries, so that green technology sectors can emerge there.