MIPF 2024

Sharing practical knowledge and experiences to advance the 2030 Agenda

UNIDO, together with Saudi Arabia’s Ministry of Industry and Resources (MIM), organized the second edition of the Multilateral Industrial Policy Forum (MIPF 2024) from 23-24 October in Riyadh, Saudi Arabia. The Forum was opened by H.E. Bandar Ibrahim Alkhorayef, Minister of Industry and Mineral Resources, Saudi Arabia, followed by addresses by UNIDO’s Director General Gerd Müller, the Guest of Honour H.R.H Abdulaziz Bin Salman, Minister of Energy, Saudi Arabia, and H.E. Amadou Oury Bah, Prime Minister, Guinea. The first day of the Forum featured three ministerial roundtables, which focused on advancing an Arab industrial integration strategy, leveraging industrial policy to maximize the impact on the Sustainable Development Goals (SDGs), and harnessing industrial policy to acclerate the graduation of Least Developed Countries (LDCs).

The three high-level round tables focused on MIPF 2024’s guiding themes:

AI, digitalization and automation in manufacturing;
the energy transition and industry transformation, and
resilient and sustainable supply chains.

KSA National Industrial Strategy Journey and Industry Ecosystem

The Kingdom of Saudi Arabia (KSA) has embarked on a transformative journey of industrialization since the late 1960s, which has significantly contributed to its economic growth. With a 25-fold increase in manufacturing value added (MVA) since the mid-1970s, Saudi Arabia’s success is attributed to robust government support, strategic infrastructure investment and the establishment of leading institutions such as the Royal Commission for Jubail and Yanbu (RCJY). This foundation has allowed for the growth of industrial cities focused on petrochemicals and mining, while also prioritizing environmental sustainability and workforce development to meet the industrial sector’s evolving needs.

Government Support and Strategic Planning

KSA’s industrial transformation has been underpinned by solid government policies and five-year plans aimed at economic diversification and sustainable growth. The establishment of the RCJY and the Saudi Industrial Development Fund has facilitated significant investments in infrastructure and industrialization.

Environmental Sustainability

The focus on converting gas into valuable products rather than burning it for energy has resulted in significant CO2 emissions reductions. Environmental considerations are now integral to Saudi Arabia’s industrial development, ensuring that its industrial cities can operate sustainably.

Human Capital Development

The alignment of educational programmes with the industrial sector’s needs is crucial for success. Saudi Arabia is investing in education and training to develop a skilled workforce that can support the country’s ambitious industrial objectives and adapt to the Fourth Industrial Revolution (4IR).

Integration and Value Chain Optimization

Saudi Arabia aims to create a robust ecosystem that integrates various sectors—mining, energy, industry and logistics—enhancing value chains to attract foreign direct investment (FDI) and foster innovation. The focus is on establishing a comprehensive strategy that goes beyond national borders, ensuring that Saudi Arabia’s industrial products can compete globally.

International Organizations: Supporting Economic Transformation Through Industrial Policy

Effective industrial policy requires a comprehensive understanding of a country’s social, economic and political context. Building and enhancing a country’s productive capacities is critical for fostering innovation and driving sustainable economic growth. International organizations provide frameworks and tools to help countries tailor their industrial policies to local needs and conditions. Collaboration between multiple stakeholders, as well as the need to account for cultural sensitivities in policy design and implementation, are key to successfully navigating the challenges of industrialization and to achieving the sustainable development goals (SDGs).

Strategic Leadership and Long-term Vision

Effective industrial policies require strategic leadership that looks beyond short-term gains and focuses on long-term transformation and incorporating emerging markets, such as digital infrastructure and renewable energy.

Importance of Productive Capacities and Multistakeholder Collaboration

Productive capacities are fundamental to a nation’s economic potential. Understanding and improving these capacities is crucial for fostering innovation and achieving economic growth. Active engagement of all stakeholders is essential for the successful activation and maturation of industrial policies.

Focus on Economic Diversification

Economic diversification is critical, particularly for least developed countries (LDCs), to reduce reliance on agriculture and mining. Tailored technological and industrial policies can help these countries leverage their unique resources and capabilities for broader economic transformation.

Role of International Organizations

International organizations such as UNCTAD, the OECD and WTO play a crucial role in supporting countries, especially LDCs, in developing tailored industrial policies. They provide diagnostic tools, policy frameworks and collaborative platforms to facilitate countries’ effective industrial transformation.

UNIDO’s Industrial Development Report - Regional Launch

The Industrial Development Report (IDR) 2024 emphasizes the critical role that industrialization plays in addressing contemporary global challenges, particularly in relation to the Sustainable Development Goals (SDGs). It finds that a well-structured industrial policy can catalyse innovation, job creation and environmental sustainability, and highlights the need for a collaborative and regionally coordinated approach to industrial development, especially in the context of the ongoing polycrisis, which includes rising poverty and unemployment. IDR24 calls for strategic partnerships across sectors to enhance countries’ manufacturing capacities and achieve economic resilience.

Transformative Potential of Industrialization

Industrialization is recognized as a driver of innovation and job creation, with the manufacturing sector being a hub for green technologies that can significantly reduce emissions. Effective industrial policies aligned with the SDGs are crucial for harnessing this potential.

Need for Coordinated Efforts

Achieving the SDGs requires the collaboration of government, the private sector and academia to attract direct investments and create production capacities. To be effective, industrial policies must be SDG-oriented, future-ready, collaborative and regionally coordinated.

Focus on Future-Ready Policies

Future industrial policies must embrace megatrends such as digitalization, the energy transition and demographic shifts. Countries must prepare for these changes by integrating advanced technologies and fostering sustainability in manufacturing.

Inclusive and Growth-Oriented Strategies

For industrial development to be effective, it must be inclusive and focused on creating quality job opportunities. Countries such as Saudi Arabia and Bahrain are implementing strategies that prioritize advanced manufacturing and sustainable practices to enhance their economic resilience and global competitiveness. Saudi Arabia prioritizes skill enhancement through partnerships with vocational and technical institutes, offering specialized training programmes linked to employment opportunities. Continuous education, on-the-job training, and targeted skill development ensure that the workforce remains competitive and aligned with industry advancements.

Fireside Chat: Artificial Intelligence - Ethics and Sustainability

The ethical implications and sustainability of deploying artificial intelligence (AI) in industry and manufacturing have taken centre stage, revolving around the need for fairness in AI, the importance of inclusive technology, and the balance between regulation and innovation. The focus should be on accountability, investment in digital infrastructure, and the potential of AI to create job opportunities rather than replace them.

Ethical Considerations and Accountability

The deployment of AI must prioritize fairness and address historical biases present in training datasets. It is crucial for governments to ensure accountability in AI usage to maintain public trust and avoid reputational damage.

Inclusivity and Accessibility of Technology

To prevent a widening digital gap, investments in affordable and scalable digital infrastructure are essential. Training initiatives must be coupled with job opportunities, particularly in less developed countries, to mitigate brain drain and ensure that the workforce can benefit from technological advancements.

Balancing Regulation

Governments must find a balance between overregulation and underregulation of AI. AI regulation should involve discussions beyond economic implications, ensuring that both private sector initiatives and governmental frameworks are adequately developed to manage the complexities of AI integration.

Game Changer Session 1A: Digitalization for Sustainable Manufacturing

The discussions revolved around how advanced digital technologies such as artificial intelligence (AI), Internet of Things (IoT) and data analytics improve the manufacturing sector’s efficiency, reduce waste and optimize resource use. Real-world examples showcased the environmental and economic benefits of adopting digital solutions, emphasizing the importance of benchmarks for tracking progress. Challenges such as high costs, limited infrastructure and technical skill gaps were addressed with strategies to overcoming them, including government incentives and capacity development initiatives. The need for collaboration between government, industries and international bodies to scale sustainable practices was also emphasized.

Crucial Role of Digital Technologies

Digital tools such as AI, IoT and data analytics are crucial for enhancing manufacturing efficiency, minimizing waste and optimizing resource utilization. These technologies enable real-time monitoring of production processes, allowing manufacturers to effectively track energy consumption and emissions.

Challenges in Implementation

There are several obstacles to the adoption of digital solutions, including high upfront costs, lack of technical knowledge and limited access to infrastructure, especially for small and medium enterprises (SMEs). Strategies such as government incentives, capacity development initiatives and public-private partnerships are essential to overcome these challenges.

Real-World Use Cases

Specific examples from various industries showcased how digital transformation has significantly improved sustainability metrics. These case studies illustrated both environmental and economic benefits, highlighting sustainability as a competitive advantage for manufacturers.

Benchmarking and Metrics

Initiatives such as AIM Global Alliance are valuable for benchmarking and tracking progress in sustainable manufacturing. Utilizing data-driven insights to measure the environmental impact of digital transformations is crucial for guiding continuous improvements in energy efficiency and sustainability reporting.

Game Changer Session 1B: Quality Infrastructure

Quality infrastructure (QI), which encompasses standards, technology regulations, assessment, testing, certification, metrology, accreditation and market surveillance, has the transformative potential to accelerate sustainable industrialization and global economic integration. Discussions highlighted the role of quality policy in promoting product and service quality, emphasizing the necessity of multi-stakeholder engagement and alignment between the business sector and national strategies to boost competitiveness. The importance of QI in advancing sustainable development was underscored by all panellists, with a shared call for continuous improvement, stakeholder cooperation, and alignment with the Sustainable Development Goals (SDGs).

Significance of Quality Infrastructure

A robust quality infrastructure system, i.e. standards and technology regulation, testing and certification processes, is essential for successful international trade and economic development.

Multi-Stakeholder Engagement is Essential

Successful QI implementation requires collaboration among the government, private sector, academia and international organizations to ensure standards and practices meet both local and international expectations and to address gaps such as gender inclusion and monitoring mechanisms.

Prioritizing Sustainability

Transitioning towards sustainable practices in industrial development is crucial, as consumers increasingly demand products produced in environmentally and socially responsible ways. QI frameworks must therefore align with environmental and social goals while enhancing infrastructure resilience.

Continuous Regional and National Adaptation

Countries must regularly evaluate and improve their QI policies to remain competitive and respond to emerging global challenges and market demands. This, in particular, requires industry alignment with international standards and strategies to bolster competitiveness.

Game Changer Session 1C: Policies to Build Green Demand in Heavy Industry Sectors

The practical need for policies to stimulate green demand in heavy industry sectors, which are major contributors to global CO2 emissions, was discussed. The panellists highlighted the key challenges, including policy barriers, lack of infrastructure and uncertainty of demand for green products. Discussions emphasized the importance of green public procurement and market mechanisms to incentivize low-emission practices, particularly in sectors such as cement and concrete. Participants highlighted the necessity of comprehensive decarbonization strategies that engage the entire supply chain, urging collective action and stronger collaboration between governments and industry to achieve these goals and effectively address challenges.

Demand Creation is Crucial

Policies must focus on generating consistent demand for green products to make decarbonization projects viable and attract long-term investment. Governments can play a key role by adopting green procurement standards and pledges, setting a precedent for industries to follow.

Value Chain Collaboration

Decarbonizing heavy industries requires a comprehensive approach involving upstream and downstream sectors, with an emphasis on synergies and sustainable practices.

Comprehensive Decarbonization Strategy

The decarbonization of heavy industries, such as the cement industry, requires a holistic approach that addresses energy, material and capital intensity while fostering collaboration across sectors to utilize alternative fuels and cleaner raw materials.

Addressing the Green Premium

Bridging the cost gap between green and traditional products is critical, with measures such as subsidies, certifications and targeted interventions helping to build confidence in sustainable markets. Price transparency and demand certainty in the clean hydrogen market will be key.

Game Changer Session 1D: Clean Energy Transition for Industrial Decarbonization

With the ongoing global energy transition, there is a significant push towards adopting renewable energy sources to electrify fossil-powered applications in industries and transportation. This session focused on innovative use cases of clean energy in industrial decarbonization, highlighting the transformative potential of renewable energy and Power-to-X-technologies, which can decarbonize hard-to-abate sectors and enable the transport and trade of clean energy products over long distances. Such advancements can be leveraged to achieve international climate goals and foster industrial transformation. Key topics included innovative clean energy applications, best practices, local benefits, challenges faced and strategies for accelerating the clean energy transition.

Renewables for Industrial Decarbonization

The integration of renewable energy and Power-to-X technologies is crucial for decarbonizing heavy industries such as steel, power generation and transport, aligning with international climate goals under the Paris Agreement.

Local and Global Benefits of Clean Energy Projects

Clean energy initiatives can enhance energy security, create employment opportunities, attract investment and facilitate skills upgrading, particularly in emerging economies and less developed countries.

Challenges and Solutions in Clean Energy Adoption

Emerging economies face obstacles in adopting clean technologies, such as limited infrastructure, financing and policy frameworks. Lessons from successful projects highlight the importance of targeted actions to address these barriers.

Enabling the Clean Energy Transition

Key conditions for a successful clean energy transition include favourable policies, investment in infrastructure, capacity development initiatives and international collaboration. Real-world case studies demonstrate how these elements converge to accelerate industrial decarbonization.

Game Changer Session 2A: AI and Manufacturing

Cutting-edge artificial intelligence (AI) technologies and other digital innovations are revolutionizing industrial processes. Case studies demonstrating the successful integration of AI and other digital tools in manufacturing, which lead to enhanced productivity, reduced operational costs and improved product quality, were showcased. The challenges faced by industries in adopting AI, including high implementation costs, lack of skilled labour and resistance to new technologies were addressed as well, while proposing solutions such as government support programmes and workforce training initiatives. Future trends in AI that could drive sustainability and further revolutionize the manufacturing sector were also discussed.

Benefits of AI Integration in Manufacturing

AI technologies, such as automation and advanced data analytics, significantly enhance productivity and quality while reducing operational costs in various industries.

Challenges to AI Adoption

Common barriers to implementing AI include high costs, a shortage of skilled labour, and resistance to change, necessitating solutions such as government support and incentives, public-private partnerships and workforce training (reskilling and upskilling).

Significance of Collaborative Efforts

The importance of cooperation through initiatives such as the AIM Global Alliance to promote AI adoption and ensure environmentally sustainable manufacturing practices will play an increasingly important role.

Future Trends in AI

Emerging AI technologies are expected to further revolutionize the manufacturing sector, driving sustainability efforts by reducing energy consumption and emissions and improving precision and reducing waste.

Game Changer Session 2B: Productivity and Jobs: Industrial Policies to Beat the Trade-off

Productivity growth is essential for creating a positive cycle where economic gains translate into better livelihoods. Yet, many developing economies face challenges with low-paying, precarious jobs and risk exacerbating unemployment if policies prioritize productivity without considering job creation. The panellists called for balanced strategies that attract investment, foster inclusive growth, and ensure labour market governance through collaboration among all stakeholders. The potential impacts of artificial intelligence (AI) on employment were discussed as well, requiring policies that support skill development and the integration of context-specific technologies to address both opportunities and challenges.

Link Between Productivity and Job Quality

Higher labour productivity positively correlates with better quality jobs and higher wages and is essential for inclusive economic development.

Vision for Inclusive Growth Policies

Long-term development plans should align with global goals and integrate multiple perspectives. Policies that attract investments and enhance labour demand must be implemented to ensure inclusive economic growth.

Collaboration for Sustainable Growth

Engaging multiple stakeholders, including the government, private sector and civil society, is crucial for developing effective policies and labour market governance with the aim of achieving sustainable growth.

Addressing AI and Labour Displacement

Technologies such as AI can drive productivity but also pose risks of labour displacement. Governments must create incentives for skill upgrading to mitigate the risks of job loss and align technological adoption with local needs.

Changer Session 2C: Sustainable Supply Chains

The discussions highlighted the urgent need for sustainable practices within global supply chains due to their significant environmental footprint. The shift from voluntary to mandatory due diligence was emphasized as crucial for fostering responsible business practices, which can be established through national policies. Robust collaboration between governments, businesses and international organizations are key to strengthening supply chain sustainability and resilience, particularly in the face of geopolitical tensions and environmental challenges. The integration of sustainability into production processes and opportunities arising from regulatory-driven transformations were also discussed.

Mandatory Sustainability Compliance

The shift from voluntary to mandatory sustainability-driven regulations is reshaping the landscape of global supply chains, requiring businesses to adapt to new compliance standards to remain competitive. Responsible business practices contribute to environmental and social sustainability.

Role of Public-Private Partnerships

Strong collaboration between the government and private sector are critical for industrial success. Such partnerships, for example, have led to a significant increase in local production and export capacity in Morocco’s automotive industry.

Local Integration and Competitiveness

Increasing the local integration rate and sourcing components domestically enhances competitiveness and resilience in global markets. Moreover, businesses must move beyond traditional product-focused processes to create a holistic approach to quality assurance.

Collaborative Approaches for Resilience

Effective supply chain resilience requires alignment and collaboration among all stakeholders, including government, industries and international organizations, to address supply chain disruptions and advance technological innovation.