UNCTAD advocates green industrial policies for economic development
By deploying renewable energy towards production as well as embracing a circular economy, Nigeria and other developing economies stand to benefit from a diversified production structure and improved domestic resource mobilization.
According to the United Nations Conference on Trade and Development latest report, the development agency called for a transformative approach to climate adaptation, with large-scale public investment programmes to adapt to future as well as current threats, and green industrial policies to drive growth and job creation.
The report proposes a “retrofitted” developmental state, empowered to implement green industrial policies and tuned to local economic circumstances, as the best way forward.
According to Richard Kozul-Wright, director of UNCTAD’s globalization and development strategies division, and lead author of the report, “Climate adaptation and development are inextricably connected and policy efforts to tackle adaptation must acknowledge this in order to have a sustainable and meaningful impact.”
The only lasting solution, he suggests, “is to establish more resilient economies through a process of structural transformation and reduce the dependence of developing countries on a small number of climate-sensitive activities.”
Activities related to renewable energy production and the circular economy can, the report suggests, operate at a low scale, opening business opportunities for small firms and rural areas, help to diversify economic production structures and reduce many countries’ dependence on the production of a narrow range of primary commodities. This could, in turn, enlarge the tax base and foster domestic resource mobilization as a source of development finance.
It, however, added that domestic resource mobilization will need to be strengthened, including through more active central banks, dedicated public banks and strategic fiscal policies.
“Given the systemic nature of the adaptation challenges and the need to ensure more equitable outcomes, the development state needs to become a regulator and coordinator of private green finance and go much further than being simply a de-risking vehicle.
“As central banks around the world were able to help support governments directly during the COVID-19 pandemic, the report considers how the post-pandemic recovery period could provide an opportunity to follow this same path in support of climate-related investments”, the report stated.
UNCTAD Secretary-General Rebeca Grynspan said: “The report demonstrates that sufficient action to adapt to the climate challenge will require a transformed approach that is proactive and strategic rather than simply retroactive. But developing country governments need adequate policy and fiscal space to mobilize large-scale public investment to face future climate threats, while ensuring these investments complement development goals.”