From a demand perspective, the importance of industrialization can hardly be overestimated. Manufactured goods account for up to 60 per cent of household consumption worldwide. Moreover, industrial goods tend to become cheaper over time, reaching a growing number of consumers.
The IDR 2018 report by UNIDO highlights the fact that the consumption of manufactured goods is an important catalyst for the achievement of SDG 9. Without a critical mass of consumers, industrialization cannot take off and be sustained over time.
The report presents new evidence on the relative roles played by domestic and global sources of demand in driving industrialization. Domestic demand for manufacturing goods is a key driver of growth. Its relative importance has been growing in recent years, driven by the emergence of a consumer class in emerging industrial countries. The extent to which countries benefit from domestic demand, however, crucially depends on the distribution of income with more unequal countries experiencing lower growth as well as on a countrys level of industrialization.
The report also warns about the environmental impact of increased consumption, and calls for a shift in consumption patterns towards the purchase of environmental goods that minimize use of natural resources and toxic materials, as well as emissions of waste and pollutants.
A key message of the report is that the development of green industries requires major shifts in consumption patterns towards the purchase of environmental goods. Important barriers to the widespread consumption of environmental goods produced by green industries need to be removed. These include too high prices, gaps in consumer awareness of environmental concerns and biases in purchasing behaviour.