EMs are at risk of falling behind as the green tech revolution revs up

Green tech capabilities and their ability to export climate tech will determine economic inequalities between emerging and developed economies, according to a report released by UN Conference on Trade and Development (UNCTAD) analyzing 166 countries' readiness to use and export 17 frontier technologies. The emerging frontier technologies the report studied — which include renewables and clean energy tech such as EVs, solar, and green hydrogen — are projected to collectively generate some USD 9.5 tn by the end of the decade.

How much could EMs potentially miss out on? Green technologies are expected to reach a market value of USD 2.1 tn in 2030 — fourfold higher than current market value, the reports finds, adding that developed countries are on a trajectory to ride the green tech wave on the back of strong policy action and investments. Developing countries, on the other hand, are at risk of missing out on the tech revolution and the economic opportunities that come with it due to a lack of regulations, technical and scientific know-how, infrastructure, and capital to compete with developed markets, according to UNCTAD.

A glance at the numbers: The net global exports of green technologies more than doubled from 2018 to reach over USD 156 bn in 2021, the report states. During the same period, emerging markets’ share of global exports plummeted 15 percentage points to below 33% by 2021.

Why is this important? “We are at the beginning of a technological revolution based on green technologies … Developing countries must capture more of the value being created in this technological revolution to grow their economies,” UNCTAD Secretary-General Rebeca Grynspan said. “Missing this technological wave because of insufficient policy attention or lack of targeted investment in building capacities would have long-lasting negative implications,” she added.

Who tops the list and who is lagging behind? Developed countries including the US, Sweden, Singapore, Switzerland and the Netherlands top the list on the back of solid rankings across the five metrics of the index: ICT, research and development, skills, finance indicators, and industrial capacity, UNCTAD notes, adding that countries in Latin America, the Caribbean, and sub-Saharan Africa are the most unprepared to adapt and adopt the frontier technologies that the global economy will reorient itself toward.

From our neck of the woods, the UAE comes in at number 37, followed by Saudi Arabia placing at 47, Bahrain at number 60, Oman at 64, Tunisia at 66, Qatar at 67, Morocco at 70, Lebanon at 77, Jordan at 80, Egypt at number 83, Algeria at 97, and Sudan coming last at 163.

What have the top developing countries done to rise in the ranks? Emerging countries high on UNCTADS’ list include China (35), Brazil (40), and India (46) exceeded readiness expectations by acclimating their economy to the new technological revolution through strong government policies supporting innovation, according to UNCTAD. China outperformed its emerging counterparts due to salient government policies ramping up tech advancements like the country’s 2006 renewable energy law, which boosted solar energy subsidies and introduced initiatives to increase private sector contribution in renewables, the report notes.

What needs to be done? Emerging markets will need to channel more capital toward frontier and green sectors through the introduction of policy instruments, smart specialization initiatives, and demonstration projects, according to UNCTAD. Developing economies will also have to upscale their technical skills, expand investments in ICT, infrastructure, and plug the growing connectivity chasm between small and large enterprises to enable mass production and use of green and frontier technologies, the report notes.

But where’s the capital? The international economy should play an integral role in boosting emerging economies’ green tech readiness, investing more capital to support developing countries' tech capabilities and establishing trade rules fostering competition while being aligned with the Paris Agreement on climate change, UNCTAD says.