SDG 9: Industry, Innovation and Infrastructure
Today we are zooming in on SDG 9, which looks at Industry, Innovation and Infrastructure. A few years ago I heard a statistic that has stayed with me and that was that 75% of the infrastructure that will exist in 2050 doesn’t exist today (Nextcity.org). That stat was released back in 2014 so it’s not 100% accurate today but it does shows the magnitude of just how much infrastructure will be constructed and invested in in the coming decades - the Global Infrastructure Hub estimates somewhere around $94 trillion by 2040. That is why it is so crucial that we consider infrastructure, industry and innovation when we talk about sustainable development.
SDG 9 is made up of 5 targets and three Means of Implementation that focus on sustainable and resilient infrastructure and industrialization. Another big component of this goal is science, research, technology and innovation.
Target 9.1
Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all.
What it means
While the term infrastructure can be quite broad, it usually is used to describe the institutions and physical systems needed to run an economy and can be separated into hard and soft.
Hard infrastructure are the physical systems needed to support a modern economy including transportation infrastructure such as bridges, roads, airports, and rail transport; water infrastructure such as water supply, water resource management, flood management, proper sewage and drainage systems, and coastal restoration infrastructure; power and energy infrastructure such as the power grid, power stations, wind turbines, gas pipelines, and solar panels; and telecommunications infrastructure such as telephone network, broadband network, and WiFi services.
Soft infrastructure is more service oriented and includes political infrastructure such as governmental institutions like courts of law, regulatory bodies, and public security services; educational infrastructure such as public schools and universities, public training institutes; health infrastructure such as public hospitals, subsidized health clinics; and recreational infrastructure such as public parks and gardens, beaches, historical sites, natural reserves (CFI).
Generally within SDG 9, the term infrastructure is focused more on hard infrastructure and specifically transportation and telecommunication infrastructure because energy and water have their own SDGs. This becomes evident by how this particular target is measured which is proximity to an all-season road and transport or freight volumes.
The first indicator is commonly known as the Rural Access Index or RAI and measures the share of a country’s rural population that lives within 2 km of an all-season road, which is a reasonable walking distance of approximately 25 minutes for people’s normal economic and social purposes (UN Stats). In rural areas in low- and middle-income economies many people continue to lack vital access to an all-season road. With better roads, farmers and other business owners can bring products to markets more efficiently, and families can more easily get to schools, hospitals, and other vital facilities. Enhancing rural road connectivity also helps in the long term by elevating agricultural productivity, business profitability, and employment.
The second indicator looks at passenger and freight volumes which are respectively measured in passenger-km and tonne-km, and is broken down by mode of transport. For the purposes of monitoring this indicator, passenger-km data are split between aviation, road (broken down between passenger cars, buses and motorcycles) and rail, and tonne-km are split between aviation, road, rail and inland waterways (UN Stats). The idea behind this indicator is that the movement of people and goods is crucial to a strong economy.
Where we are currently
For the Rural Access Indicator, data is only available in 25 countries and based on the data from those countries almost 300 million rural dwellers lack good access to roads, of a total rural population of approximately 520 million. The RAI ranges from 95% in the United Arab Emirates, 93% in Lebanon, and 87% in Bangladesh, to 17% in Zambia and only a little over 11 % in Madagascar. But due to a much larger population, the number of people without access in Bangladesh (14 million) is more than twice that in Zambia (7 million). Of all the countries with available data, Nigeria and Ethiopia have the most people without access to an all-season road— 70 million and 64 million, respectively (SDG Report 2021).
For the passenger and freight volume I am just going to throw a bunch of numbers at you to give you an overview of the big picture. In 2019, developing economies accounted for 58 % of goods loaded and 65 % of goods unloaded at seaports worldwide. An estimated 811.2 million twenty-foot equivalent units (TEU) were handled in container ports worldwide with more than half being concentrated in Eastern and South Eastern Asia. Together, Europe and North America ranked second in terms of container port-handling volumes (22.9 %) followed by Western Asia and North Africa (8.4 %), Latin America and the Caribbean (6.5 %), Central and Southern Asia (3.9 %), Africa (2.3 %) and Oceania (1.6 %).
2016, the air transport industry supported 65.5 million jobs globally, and the direct and indirect global economic impact of air transport is estimated at 2.7 trillion US dollars, which is equivalent to 3.6 % of the world gross domestic product (GDP). In 2018, 6.8 trillion US dollars worth of goods were expected to be transported internationally by air, representing 35 % of world trade by value, despite representing less than 1 % by volume. International passenger traffic suffered a dramatic 60 % drop over 2020, representing airline financial losses of 371 billion dollars resulting from the COVID-19 impacts (SDG Report 2021).
Target 9.2
Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries.
What it means
While this target states “sustainable industrialization” what it is actually focused on is manufacturing. It calls for doubling the share of industry in least developed countries or LDCs to help them catch up with advanced economies. (UNIDO) According to UNIDO, manufacturing has historically been considered an engine of economic growth. Rapid industrial growth has played a crucial role in job creation, resulting in the absorption of surplus labour from agriculture and other traditional sectors into the industrial sector with higher wages. This can be seen by the economic success of high-income countries in Europe and North America, thus many see it as particularly important for countries with a relatively low income level, and in particular LDCs. However, before we get too deep into this target, I think it is important to note that every country has its own unique economic structure so focusing on manufacturing can be a little reductive. For example, a remote island country is going to have a small share of manufacturing as a proportion of its economy, and a much higher proportion of the economy coming from tourism than other countries. And, it will probably never really make sense for them to increase manufacturing capacity as a means of development because of resource availability, remoteness, etc. So it’s important that we remember that while generalities are ok for global comparisons and targets, actual implementation requires approaching things on a case-by-case basis, taking unique contextual conditions into consideration.
This target is measured by two indicators - manufacturing value added (MVA) as a proportion of GDP and per capita, and share of manufacturing employment in total employment (SDG Tracker).
I think the employment indicator is pretty straight forward but let’s get into manufacturing value added a little because it’s more complex. The technical definition is the total estimate of net-output of all resident manufacturing activity units obtained by adding up outputs and subtracting intermediate consumption (UNIDO Stats). I realize that is a lot of jumbled words so I think it will help if I break that down a bit further. Output is the value of the goods produced through manufacturing. Resident manufacturing is defining the scope of where that manufacturing takes place, so for the SDGs, within a country, however in general the statistic is compiled by looking at an economic zones because some territories function separately from the country they are within. And intermediate consumption is effectively the inputs that are used in the manufacturing process. This could be for energy, for example. This is a bit of a controversial indicator because it is difficult to compare the value of outputs in different countries. Let’s take a simplistic example to illustrate this point. A BigMac costs $12.93 in Switzerland but $3.57 in South Africa (Global Product Prices), it’s the exact same product but its value is determined by where it is consumed. Now if you imagine the same thing for every single good produced in every country you can imagine how hard it is to compare the value of outputs across countries.
Where we are currently
Until 2019, global MVA grew faster than GDP, resulting in an increase in the share of manufacturing in the world economy overall. As a result of the COVID19 outbreak, world manufacturing production plummeted by 6.8%, the largest drop since the global financial crisis of 2009. The global share MVA in total gross domestic product (GDP) fell sharply from 16.6 % in 2019 to 16.0 % in 2020. The crisis did push one global trend - a relative shift away from manufacturing from industrialized countries to developing economies, this is partly influenced by off-shoring activities and the relocation of manufacturing production to lower wage economies (UNIDO).
Among the main economic sectors, manufacturing is the third largest sector in the world, with some 454 million workers, encompassing 13.7 % of global employment in 2019. The majority of global manufacturing employment is concentrated in developing and emerging industrial economies. These countries employed 365 million people, accounting for around 80 % of global manufacturing jobs in 2019. The main manufacturing employer is China, with 150 million workers in 2019, accounting for 41 % of all manufacturing jobs in developing and emerging industrial economies, and 33 % of the world’s manufacturing employment in 2019 (UN Stats). In 2019, the share of manufacturing employment was largest in Eastern South-Eastern Asia (17.7 %) and smallest in Oceania excluding Australia and New Zealand (3.3 %) and sub-Saharan Africa (6.0 %)(UNIDO).
Target 9.3
Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets.
What it means
This target highlights the importance of small-scale industrial enterprises in economies. They are a major source of employment and self-employment in developing and emerging industrial economies, yet generally operate with a relatively small amount of capital investment and a predominantly local resource base. Hence, access to credit is particularly important to small-scale firms to increase their competitiveness (UNIDO).
This target is measured by the proportion of small-scale industries in total industry value added and the proportion of small-scale industries with a loan or line of credit (SDG Tracker). While these are pretty straightforward indicators, the big challenge with measuring this is determining what counts as a small enterprise. UNIDO has been designated to determine a globally agreed upon definition but generally data is still quite sparse on this particular target.
Where we are currently
Country and region specific trends are very prevalent on this target. While the manufacturing value added produced by small-scale enterprises in Western, Central and Southern Asia (such as the State of Palestine, Cyprus or Georgia) reveal very high shares of over 20%, the top performing countries in Latin America and the Caribbean did not reach 10 % (UNIDO).
Globally, only one in three small industrial enterprises has a loan or line of credit (UN Stats). However, access to financial services differ regionally. For instance, only 21.5 % of small-scale industries in sub-Saharan Africa received loans or lines of credit, compared with almost half in Latin America and the Caribbean. (UN Stats)
Target 9.4
By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities.
What it means
This target zooms in on the environmental sustainability of industrial development, calling on all industries to increase their resource use efficiency and the adoption of clean and environmentally sound technologies and industrial processes (UNIDO). It is measured by CO2 emissions per unit of value added, which is the ratio between CO2 emissions from fuel combustion and the value added of associated economic activities (SDG Tracker). The indicator can be computed for the whole economy by taking total CO2 emissions and putting it over GDP, or for specific sectors, notably the manufacturing sector, by taking CO2 emissions from manufacturing industries and putting it over manufacturing value added. (UN Stats)
Where we are currently
Between 2000 and 2014, almost all regions showed a reduction in CO2 emissions from manufacturing per unit of MVA. Europe and Northern America reduced their emissions intensity by 36% over this period, and all of the 10 largest manufacturing countries saw decreases. However, these reduction trends are not reflected in the global emissions intensity level, since a significant share of global MVA has moved to countries with poorer emissions performance. (UN Stats)
Global CO2 emissions from fuel combustion declined slightly in 2019 from a historic high of 33.5 billion tons in 2018, owing mainly to changes in power sources in advanced economies and milder weather conditions across the continents. Global CO2 emissions from manufacturing continued their decline since 2014 and accounted for 5.9 billion tons in 2018. (UN Stats)
Target 9.5
Enhance scientific research, upgrade the technological capabilities of industrial sectors in all countries, in particular developing countries, including, by 2030, encouraging innovation and substantially increasing the number of research and development workers per 1 million people and public and private research and development spending.
What it means
Research and experimental development or R&D is the creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of science, humankind, culture and society – and to devise new applications for that available knowledge. (UN Stats) Virtually everything we rely on today is the product of R&D from post-it notes to power grids to the internet and vaccines, so I think it goes without saying that it is crucial to sustainability and human development.
This target is measured by two indicators, research and development expenditure as a proportion of GDP and researchers (in full-time equivalent) per million inhabitants (SDG Tracker). To expand a little, the first one is the expenditure on research and development (R&D) activities including basic research, applied research, and experimental development as a percentage of total gross domestic product (GDP) of a given country, and the second one is a count of researchers in R&D which is defined as professionals engaged in the conception or creation of new knowledge, products, processes, methods, or systems and in the management of the projects concerned. Postgraduate PhD students engaged in R&D are included in the count.
Where we are currently
So how are we doing on this one? Well, global investment in R&D has continued to grow at a good pace over the past two decades , reaching 2.2 trillion US dollars in 2018, up from 1.4 trillion in 2010 and 742 billion in 2000. This represented an average annual growth rate of 4.4% over this period when adjusted for inflation. While Europe and Northern America lead global investments in R&D representing 47.4 %, Eastern and South-Eastern Asia have been catching up by increasing their share from 22.6 % in 2000 and 32.2 % in 2010 to 40.6 % in 2018, a high average annual growth rate of 7.9% over that period. (UN Stats)
Relatively, the proportion of GDP invested in R&D has increased from 1.51% in 2000 to 1.73% in 2018. However, this global figure hides the wide differences between the various regions of the world. Europe and Northern America, and Eastern and South-Eastern Asia stand at 2.28 and 2.12% respectively, which of course is above the world average of 1.73%. But most developing regions fell short of the world average. Sub-Saharan Africa is just 0.37% and Northern Africa and Western Asia have only 0.86%. For LDCs and LLDCs, the average was even lower at 0.20%. (UN Stats)
Now on researchers, the number of them worldwide has leaped from 4.9 million in 2000 and 7.1 million in 2010 to 9.4 million in 2018, representing an average annual growth rate of 3.7%. In relative terms, globally, the number of researchers per million inhabitants shifted from 801 in 2000 and 1,022 in 2010 to 1,235 in 2018. The regional situation regarding researchers per million inhabitants also showed a wide disparity across the regions, following a similar pattern as investment in R&D. In Europe and North America there are 3,847 researchers per million inhabitants, whereas this number was as low as 99 in sub-Saharan Africa. (UN Stats)
There is also a gendered dimension here. Globally, women accounted for only 30.5 % of total researchers, which also had wide variations across regions. While Latin America and the Caribbean have 44.9% of female researchers, the share is only to 23.1% and 21.3% in Southern Asia and Eastern Asia respectively. (UN Stats)
Means of Implementation
9A - Facilitate sustainable and resilient infrastructure development in developing countries through enhanced financial, technological and technical support to African countries, least developed countries, landlocked developing countries and small island developing States.
9B - Support domestic technology development, research and innovation in developing countries, including by ensuring a conducive policy environment for, inter alia, industrial diversification and value addition to commodities.
9C - Significantly increase access to information and communications technology and strive to provide universal and affordable access to the Internet in least developed countries by 2020.
Keep Learning
Here are a few great resources for further reading and learning:
Goal 9 Overview (2022, United Nations)
SDG Tracker (2022, Our World in Data)
Global Infrastructure Outlook (2022, Global Infrastructure Hub)
UNIDO (2022, United Nations)