Industry and development.

In the longer run, if the pace of development is to be accelerated, a rapid growth of industrial activity is indispensable. Industry must be seen as a dynamic instrument essential for rapid economic expansion and social progress in developing countries. It is doubtful if other sectors in those countries can accommodate literally hundreds of millions of new jobs required in the foreseeable future as a result of expanding populations.

It was in these circumstances that the Lima target was established under which developing countries are to account for approximately a quarter of world industrial production by the end of this century. And the International Development Strategy of the Third United Nations Development Decade called for an annual growth rate of about 9 per cent in the manufacturing output of developing countries.

I am concerned that, as indicated in the special report of the Executive Director, and the excellent UNIDO doucment "Industry in a Changing World", developing countries will not, in all probability, account for more than 15 per cent of world industrial capacity by the end of the century if present trends continue. That would represent a significant shortfall with adverse consequences for millions of individuals.

Action is therefore urgently needed on several fronts not only to reactivate industrial production in the immediate future but also to expand the over-all industrial capacity in the developing countries on a long-term and sustained basis.

In the short run, the reactivation of industrial production is intimately related to the over-all health of the world economy. Many developing countries are operating their existing industrial capacity at well below normal levels, as resources are lacking for imports of necessary raw materials, spare parts and transport equipment. In a large number of developing countries, industrial production is curtailed by lack of markets at home as well as abroad.

Steps will therefore be required to provide for balance-of-payments finance, the alleviation of the debt burden and the immediate roll back of protectionist measures against developing countries. Not only will such measures enable those countries to operate their existing industrial capacity at higher levels, but an impulse of thise nature will provide vigour to the pace of global economic growth.

Such action will be more effective if developing countries also strive for greater efficiency in their industrial sectors through effective use of resources, and by ensuring that the energies of both the private and the public sectors are fully geared to the task. This applies to industries which replace imports as well as those oriented to exports.

In the longer perspective, important problems must be dealt with, many of which are on your agenda. On the demand side, developing countries will have to take account of the fact that the kind of boisterous demand from the advanced countries for manufactures that characterized the early part of their industrial effort may not be readily forthcoming. There is a fairly wide consensus that the developed countries are likely to go through a period of relatively slow growth, for reasons connected, among other things, to structural problems. My own feeling is that these problems need to be and can be tackled so that the developed countries themselves can revert to higher growth.

Higher growth will not only help them to be far less protectionist in their trade with the third world, but will also enable a smooth process of structural adjustment and redeployment in their own industrial sectors which is a necessary ingredient for the rapid industrialization of developing countries. Furthermore, in any further round of trade negotiations, particular attention will need to be paid to expanding access to exports of developing countries.

But developing countries should not look only towards external markets. The greatest pool of unsatisfied demand for industrial goods is within developing countries themselves. The problem is that purchasing power is lacking. My own feeling is that a healthy agricultural sector, encompassing both food and commodities, will greatly help to impart dynamism to the internal markets for industrial goods within the developing countries themselves. Industrial co-operation among developing countries can also make a significant contribution. Such co-operation should include closer co-ordination between industrial sectors at regional and subregional levels.

The supply side is also crucial, and this is where the Executive Director's special report draws attention to several vital areas for action. Domestic and international finance are of fundamental importance. Among the latter, private direct investment, in keeping with the priorities of the developing countries themselves, will no doubt greatly help. But other forms of finance, especially concessional finance, will be critical as well. The least developed countries and other least developed countries and other least developed countries and other low-income countries will need special attention. As you know, the Industrial Development Decade for Africa is urgently in need of an injection of financial and technical resources.

The executive Director's report also draws attention of Member States to three other interrelated aspects of industrialization on which additional effort is critical.

First, the emergence of new forms of technology are adding a novel dimension to industrial capability. Genetic engineering, biotechnology and microelectronics are outstanding examples of such advances. These will affect both established industries and future industrial enterprises. They offer both a challenge and an opportunity to developing countries. The ability of developing countries to benefit from these advances needs to be strengthened through, among other means, the use of joint ventures when appropriate.

The technological strengthening of developing countries must also meet, at a low cost, the urgent human needs, particularly of the poorest, in fields such as food and nutrition, water and sanitation, health, pollution and energy. In other words, we must develop "technologies for humanity". The proposal that developing countries consider increasing the share of their research and development expenditure to 1.5 per cent of GNP by 1990 must be seen in this light.

Second, and closely connected, is the human resource dimension, namely the critical role of the creation and upgrading of skills for the planning and management of industrial development. This dimension should also increasingly encompass opportunities for women.

The third aspect is energy. A large number of energy-importing developing countries will continue to find energy a critical constraint in their industrialization. Continuous attempts at energy conservation and management, exploitation of energy sources, and development and application of suitable technologies should receive attention from all countries.

Let me now come to the role of UNIDO.

The responsibility of the United Nations for the promotion of international co-operation for the economic and social advancement of all peoples derives from the Charter itself. In pursuit of this objective, the United Nations system has demonstrated its usefulness and its catalytic role in encouraging economic development in general, and industrial development in particular. UNIDO has undertaken, especially since the Lima Conference, a wide-ranging programme of promotion and assistance to developing countries and has a record of proven effectiveness. The technical co-operation activities of UNIDO have significantly expanded and UNIDO has become a major executing agency in this field. This illustrates the increasing value of UNIDO to the developing countries, and reflects the hopes that those countries have placed in it for assistance in their industrialization. The role of UNIDO can only become more important in the future, given the evident need for further industrialization and the dynamic changes in industrial technology.