SDG 9 under threat from global manufacturing slowdown
The rate of global manufacturing growth has declined for a second consecutive year, dropping to a marginal rate of two percent in 2019, according to International Yearbook of Industrial Statistics 2020 by the United Nations Industrial Development Organization (UNIDO).
The growth of manufactured value added (MVA) of China, the world’s largest manufacturer, has declined from 6.2 percent in 2018 to 5.5 percent in 2019. The growth of the United States’ MVA dropped from 3.2 percent in 2018 to 2.0 percent in 2019. MVA growth in European and other industrialized economies has followed a similar trend.
Manufactured goods account for 80 percent of the world’s merchandise trade, and manufacturing has suffered from the direct consequences of a deceleration of commodity flows due to trade friction, mutual economic sanctions, uncertainties surrounding the Brexit and a deterioration in the overall business environment.
The slowdown in manufacturing in industrialized economies has in turn adversely affected manufacturing growth in developing and emerging industrial economies which fell to 2.0 percent in 2019 compared to 3.2 percent in 2018.
These declining trends in global manufacturing are observed just five years after the adoption of the Agenda 2030 and its Sustainable Development Goals (SDGs). Contrary to the SDG9 target to significantly increase the share of industrial sectors in Gross Domestic Product and total employment, the share of manufacturing in industrialized and emerging industrial economies in 2010-2019 has dropped.
During the same period, MVA’s share in GDP in other developing economies and least developed countries (LDCs) marginally increased. However, the growth observed so far in developing countries falls short to the required pace for achieving SDG targets.
A closer look at data for LDCs shows that a few countries, namely Bangladesh, Ethiopia and Myanmar, have made significant progress in expanding their manufacturing industry.
However many other LDCs, especially those in Africa, have experienced a decline in manufacturing and face the prospect of premature deindustrialization.
Analysis of sectoral data shows that China has surpassed the United States and Japan in production of motor vehicles. China accounts for more than 25 percent of global motor vehicle production. Among other emerging economies, Mexico ranks fifth after Germany, and India ranks seventh after Republic of Korea.
Workers in developing countries realize far less benefit from manufacturing employment than those in industrialized economies. In Latin American countries, for example, the share of wages and salary of value added varies from 11.0 to 42.0 percent. In contrast, in Germany and other European countries the share may amount to 45 percent.