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Development prospects for Latin America and the Caribbean in a post-COVID-19 world

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In May 2020, Latin America and the Caribbean became the epicenter of the global COVID-19 pandemic, and the number of positive cases and deaths related to the SARS-CoV-2 virus continues to grow at a fast pace. The severity of the health crisis is exacerbated by the structural problems that characterize the region in areas such as health, social and economic inequality, political strife, violence and insecurity, as well as environmental degradation. The outbreak of COVID-19 threatens to reverse economic and social progress achieved in the region over the last decade; moreover, it compromises prospects of achieving the Sustainable Development Goals (SDGs) by 2030.

In this context, the United Nations Industrial Development Organization (UNIDO) and the Latin American Network for the study of Learning Systems, Innovation and Skills Construction (LALICS) together organized a webinar titled: “Technological revolutions, changes in lifestyles and sustainable industrial development in Latin America and the Caribbean in a post-COVID-19 world”. The webinar served as platform where more than a hundred researchers, policymakers and practitioners discussed pressing challenges and opportunities, taking into account both the current health and economic crises, and the aforementioned structural problems faced by the region.

In his opening remarks, Diego Masera, Chief and Deputy Director Regional Coordination Division – Latin America and the Caribbean, highlighted the severity of the pandemic. According to the Economic Commission of Latin America and the Caribbean (ECLAC), in 2020, the region’s GDP will fall by 9.1% in annual terms, with a drastic decline in manufacturing production. Masera emphasized the pertinence of identifying alternative development models that would reduce the risk of falling into an even greater crisis due to climate change. He endorsed the UN General Secretary, Antonio Guterres who, in his recent report on the impact of COVID-19 in Latin America and the Caribbean (July 2020), asserts that the crisis calls for a reassessment of the roles of the State, the market and of civil society, in order to improve equality, transparency and democracy in the region.

In the search of long-term solutions, Masera stressed that the promotion of sustainable and inclusive industrial policies, the integration of informal workers into formal and decent work, as well as investment in research and development are crucial factors to consider. SDG9, which promotes inclusive and sustainable industrial development, innovation and resilient infrastructure, should be a central element in the development agenda of countries in the region. He stated that UNIDO, in accordance with its mandate to promote sustainable and inclusive industrial development, is ready to assist member states in the region to achieve a fast recovery from this crisis, and to prepare and build the strengths needed to give local populations a better future. 

Prof. Gabriela Dutrénit, Professor at the Department of Economics and the Postgraduate Programe in Economics and Management of Innovation Policies at the Autonomous Metropolitan University Xochimilco in Mexico City, and President of the Scientific Board of LALICS, described the current events as an historical moment marked by changes in various areas that highlight the challenges of building innovation capacities in order to reduce dependencies on external technologies and knowledge, while also opening new development opportunities. Latin America, in particular, faces new possibilities for closing gaps and contributing to an inclusive and sustainable development. She appealed to the LALICS network to rethink and propose new courses of action driven by innovation policy and productive transformation while, at the same time, building the necessary resilience to confront future crises. 

The main speaker for the webinar was Prof. Carlota Pérez, British-Venezuelan researcher, lecturer and international consultant specializing in technology and socio-economic development. Addressing the question of what influence the COVID-19 pandemic could have on the growth prospects of Latin America and the Caribbean, Pérez noted that, based on historic experience, such influence would depend on how much the pandemic can affect the pace and direction of the ongoing technological revolution in industrialized countries. In her opinion, the present situation is comparable to the post-war era, and we are moving to a situation requiring an active and omnipresent state. The challenge however, is not to replicate the past but to take a leap forward. In a scenario where Asia dominates the manufacturing of products, the opportunity for Latin America is to focus on processing industries and in the valorization of natural resources, targeting increasingly specialized, high-value markets. However, because processing industries tend to be labour-saving, she proposed a dual but integrated strategy, one that realizes potential productivity in every part of the territory, tapping into hyper-segmented markets and capitalizing on new forms of communication, transport and logistics.

According to Pérez, demand for natural resources-driven innovation will continue to grow, as production methods and lifestyles increasingly orientate towards environmental sustainability. She asserted that success in implementing this dual strategy depends on the ability to build private-public consensus framed by appropriate supporting institutions at the two ends of the strategy.

Lastly, during her intervention, Professor Helena Lastres, Associated Professor at the Institute of Economics, Federal University of Rio de Janeiro, noted that the pandemic is worsening the already complex political, economic and social situation experienced in Brazil and other countries in Latin America and the Caribbean. In her opinion, the situation is best described in the words of the late Brazilian economist Celso Furtado: “In no other moment in our history is the distance between where we are, and where we expected to be, as great as it is today.”

According to Lastres, addressing the crisis and fostering development in a post-pandemic future for Latin America and the Caribbean requires a strengthening of the role of the State, and a recovery of its development-promoting functions in the region. At the same time, she noted the growing importance of digitalization and the rapid adoption of information and communication technologies (ICT), together with the relevance of building national consensus around the pressing development needs affecting the future of Latin America. Lastres said the pandemic is reinforcing the need to prioritize the development of manufacturing systems oriented towards the provision of goods and services that are essential for the life, well-being and security of people in the region, with a special emphasis on ICTs for health and education.

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More efforts needed to boost trust in AI in the financial sector

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Governments, financial regulators and firms should step up their efforts to work together to address the challenges of developing and deploying trustworthy artificial intelligence (AI) in the financial sector, according to a new OECD report.

The OECD Business and Finance Outlook 2021 says that investment in AI finance is on the rise. The financial and insurance sector has consistently been within the top 10 industries in terms of the amount of VC investments in AI start-ups, investing over USD 4 billion worldwide in 2020. Almost 65% of VC investments in the sector went to American AI start-ups.

As AI applications become increasingly integrated into business and finance, the use of trustworthy AI will become increasingly important for ensuring trustworthy financial markets, says the report.

AI has the potential to facilitate transactions, enhance market efficiency, reinforce financial stability, promote greater financial inclusion and improve customer experience. But AI also raises unique challenges to privacy, autonomy, transparency and accountability, which are particularly complex in the financial sector, according to the Outlook.

Critically, increasingly complex AI algorithms that are difficult, or even impossible, to explain could amplify existing risks in financial markets or give rise to new risks.

Transparency, fairness, data governance and accountability are key to managing risk as determinants of trustworthy AI. Failing to foster these qualities in AI systems could lead to the introduction of biases generating discriminatory and unfair results, market convergence and herding behaviour or the concentration of markets by dominant players, which can all undermine market integrity and stability.  

Existing financial regulations may fall short of addressing systemic risks presented by wide-scale adoption of AI-based FinTech by financial firms, says the report.

These conditions have led to a critical juncture for the deployment of AI applications in business and finance, according to the Oulook. Financial regulators are grappling with whether and how to adapt existing rules, or create new ones, to keep pace with technological advances in AI applications, while striking the right balance between managing risks and supporting innovation.

At the international level, the OECD AI Principles, adopted in May 2019, became the first international standard agreed by governments for the responsible stewardship of trustworthy AI. The OECD, together with international partners working to support financial markets and financial sustainability, must reinforce efforts to facilitate multilateral engagement on implementing the Principles in the context of financial markets and other business sectors.

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50 Firms Collaborate to Champion Next Gen Careers in Industry

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The World Economic Forum today launches the New Generation Industry Leaders (NGIL) programme, a global community of fast-rising young industrialists to accelerate environmental and social progress in manufacturing and production sectors, transforming perceptions and inspiring a new generation to take up a career in industry.

Over 50 world-leading companies in the production ecosystem, including Apple, DHL, Johnson & Johnson, Rockwell Automation, Siemens and Stanley Black & Decker, are supporting the NGIL programme. Beyond proposing their young leaders to join the community, these companies are making their training materials available to the community and executives are acting as mentors for the community members.

Emerging technologies are transforming industries as diverse as automotive, chemicals, electronics, healthcare and textiles. But industrial production is facing a skills shortage in all areas from R&D and design to consumer behaviour and end-of-use cycles. Research from global consulting firm Korn Ferry found that by 2030, there will be a global human talent shortage of more than 85 million people, which could result in $8.5 trillion in unrealized annual revenues. The New Generation Industry Leaders community will play an active role to address these challenges.

Mark Maybury, Chief Technology Officer of Stanley Black & Decker said: “Stanley Black & Decker is honored to contribute to the establishment of the NGIL community which fills a critical gap in the leadership development of future industrial leaders. This programme inspires the next generation through exposure to visionary industrial leaders, cross connecting this worldwide cohort to foster peer-to-peer learning and transforming their future by accelerating their growth and focusing their purpose on global challenges.”

Tanja Küppers, Chief Operating Officer of DHL Supply Chain Europe, Middle East and Africa, said: “New Generation Industry Leaders have the ability to push innovative minds and fire up the hearts of people to reach great heights of sustainable performance; by embracing connectedness with the business, society and environment they act as responsible leaders towards their workforce, customers and partners.”

Members of the New Generation Industry Leaders programme are nominated by senior executives from their respective companies and organizations. The first cohort of leaders numbers over 100, of whom half are women. They represent more than 20 countries and 12 industrial sectors, including energy, automotive, mining and metals. Each cohort of new leaders will embark on an 18-month journey embracing the following principles and activities:

· Get inspired: learning modules in strategy, leadership and operations, delivered by thought leaders, CEOs and senior executives from the production ecosystem.

· Connect: peer networking sessions to learn from each other’s unique workplaces and career experiences and to share ideas, challenges and solutions.

· Transform: smaller cross-industry teams to help accelerate responsible industry transformation and co-create new ideas to get the world excited about new opportunities and innovations in manufacturing and production.

Members agree to collaborate to drive positive change within each impact area in their own organizations, with the goal of leveraging their shared efforts to engage with and attract younger generations.

Jeremy Jurgens, Managing Director at the World Economic Forum, said: “The transformation in manufacturing and production being driven by the Fourth Industrial Revolution can only succeed with the leadership and collaboration of young professionals. We are thrilled to announce the launch of this inaugural group of exceptional leaders who will challenge their peers to embrace the incredible opportunities promised by a career in industry.”

Lawrence Whittle, Chief Executive Office of global technology firm Parsable, said: “Today’s factories are the most technologically advanced work environments in the world. So much innovation is happening in industrial sectors. But industry has an image problem – it’s not seen by young people as tech-savvy or future-focused. We urgently need to change perceptions around a career in manufacturing to attract and retain the finest talent from mobile-first generations.”

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Clean Skies for Tomorrow Leaders: 10% Sustainable Aviation Fuel by 2030

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Today, 60 companies in the World Economic Forum’s Clean Skies for Tomorrow Coalition – whose mission is to accelerate the deployment of sustainable aviation fuels (SAF) – achieved a milestone on the path to net-zero emissions by 2050 by working together to power global aviation with 10% SAF by 2030.

As aviation remains a “hard to abate” sector in reducing Green House Gas (GHG) emissions, strong climate action from the industry is particularly important as travel begins to return to pre-pandemic levels. Accelerating the supply and use of SAF technologies to reach 10% of global jet aviation fuel supply by 2030 is a significant move to put the aviation industry on the path to net-zero emissions.

This will only be possible through the concerted effort of industry leaders. The following organizations have signed the 2030 Ambition Statement:

  • Accenture
  • ACME
  • Airbus
  • Airports Council International
  • American Airlines
  • ANA Holdings Inc
  • Bangalore International Airport Limited (BIAL)
  • Bank of America
  • Biodiesel Association of India (BDAI)
  • Boeing
  • Boston Consulting Group
  • bp
  • British Airways
  • Caphenia
  • Carbon Engineering Ltd.
  • Cathay Pacific Airways
  • Council on Energy, Environment and Water (CEEW)
  • Deloitte
  • Delta Air Lines
  • Deutsche Post DHL Group
  • Dubai Airports
  • Enerkem
  • ENI
  • Fraport
  • Fulcrum BioEnergy
  • Heathrow Airport
  • Honeywell
  • Iberia
  • Indian Institute of Petroleum
  • International Airlines Group
  • Japan Airlines
  • KLM Royal Dutch Airlines
  • Kuehne+Nagel
  • LanzaJet
  • LanzaTech
  • McKinsey & Company
  • Neste
  • Norsk e-Fuel AS
  • Novo Nordisk AS
  • oneworld alliance
  • Ørsted
  • Praj Industries Limited
  • Punjab Renewable Energy Systems Pvt Ltd
  • PwC
  • Qatar Airways Group
  • Rolls-Royce
  • Royal Schiphol Group
  • San Francisco International Airport
  • Shell
  • SkyNRG
  • SpiceJet
  • Suncor
  • Sunfire
  • Sydney Airport
  • The Energy and Resources Institute (TERI)
  • TotalEnergies
  • United Airlines
  • Velocys
  • Virgin Atlantic
  • Visa Inc.

Signatory companies include airlines, airports, fuel suppliers and other aviation innovators from around the world. They also include non-aviation companies that rely on corporate air travel for their business operations, demonstrating that the responsibility of decarbonizing the industry lies with all those who depend on the aviation sector.

“Achieving our ambition will require commitment, innovation and cross-industry collaboration from a wide range of stakeholders,” said Lauren Uppink Calderwood, Head of Aviation, Travel and Tourism at the World Economic Forum. “We are calling on governments, international organizations and others to work with us to take important steps forward through new policies, targeted investments and regulations that create a level playing field while incentivizing transformation.”

This statement is also in full support of the UN High Level Climate Champions’ 2030 Breakthrough Outcome for aviation, one of over 30 sectoral near-term targets that are critical to halving emissions by 2030 and delivering the promise of the Paris Agreement.

Achieving net-zero aviation

SAF is fully compatible with existing aircraft and is a viable industry solution in the transition to 2030 and beyond. Members of the Clean Skies for Tomorrow Coalition are championing the commercial scale of viable production of sustainable low-carbon aviation fuels (bio and synthetic) for broad adoption in the industry.

Actors across the aviation eco-system agree on the need to first reduce, as far as possible, the emissions caused by the sector. This reduction can be achieved through efforts including the optimization of routes, increased energy efficiency from aircraft design and improved ground operations. Stakeholders such as airports can play an increasingly important role in the adoption and uptake of SAF by developing SAF operational plans or kickstarting co-funding mechanisms.

Synthesized from sustainable, renewable feedstocks – such as municipal waste, agricultural residues and waste lipids, or developed through a power-to-liquid route – SAF has already fuelled more than 250,000 commercial flights.

Difficulties remain in getting SAF to scale up production due to its prohibitively high price gap with fossil-based jet fuel, resulting in a “chicken and egg” problem with supply and demand. Costs will fall if production scales up, but fuel providers are facing headwinds due to high price pressure on low SAF demand, and high risks associated with policy and investment uncertainty. Demonstrating sufficient demand and policy certainty will be crucial to building investor confidence, hence the power of this major commitment from the leading companies in the aviation energy value chain.

Sustainable Aviation Fuel Certificate (SAFc) system

To make this concerted effort possible, the Clean Skies for Tomorrow Coalition has developed a Sustainable Aviation Fuel Certificate (SAFc) system, a new accounting tool that will allow SAF emissions reductions to be claimed by travellers and cargo customers if they are willing to cover the higher costs.

The proposed system also handles fuel supply chain logistics by delivering SAF stock to airports nearest the production plants. With existing technologies and digital demand platforms such as the SAFc, best-practice sustainable aviation can reduce GHG emissions on a lifecycle basis by up to 80%.

The key to long-term net-zero aviation will be to incentivize demand for SAF-fuelled air travel. With this ambitious 10%-by-2030 coalition commitment, members are motivated to aggregate demand for carbon-neutral flying. Some are championing mechanisms including co-investment vehicles, industry-backed policy proposals, and creative value-chain stimulus programmes for corporate passenger and transport business customers.

Expert Thoughts

“Progressing the development and commercial deployment of sustainable aviation fuel (SAF) is crucial to decarbonising the aviation industry. We are investing heavily in the development of SAF and have partnerships with Velocys in the UK and LanzaJet in the US which could see us powering our flights with sustainable fuel as soon as next year,” says Sean Doyle, British Airways’ Chairman and CEO. “Earlier this month we were delighted to collaborate with bp to source enough sustainable aviation fuel with respect to all our flights between London, Glasgow and Edinburgh during COP26, substantially reducing the emissions associated with taking our customers to and from COP26 by up to 80% compared to traditional jet fuel. We need continued support from Government to scale up the development and use of SAF, which will be a game changer for our industry.”

“Delta is looking to the future of sustainable aviation while addressing the current impact of our carbon emissions. It is why we committed to carbon neutrality in March of 2020 and why we have also committed to setting a science-based targets to align with the Paris Agreement,” said Ed Bastian, CEO, Delta Air Lines. “This partnership with Clean Skies for Tomorrow builds a future for sustainable aviation by bringing together a coalition that will accelerate the supply and use of SAF technologies.”

“Our announcement today to reach 10% SAF by 2030 emphasizes our commitment to the planet and prosperity. Upscaling SAF with a global approach will boost India’s economy,” Ajay Singh, Chairman & CEO, SpiceJet. “Accelerating the SAF industry with a global approach will bring opportunities for economic growth and transformation in India.”

“We’re proud to be joining forces with more than 50 companies collectively committing to powering global aviation with 10% sustainable aviation fuels by 2030. It’s a crucial milestone towards achieving net zero flying by 2050,” says Shai Weiss, CEO, Virgin Atlantic. “From partnering on sustainable aviation fuels with LanzaTech in 2011, to becoming a founding member of the Jet Zero Council, Virgin Atlantic has been leading on sustainability for more than 15 years. Our partnership with Clean Skies for Tomorrow is another step forward in accelerating the global transition to sustainable aviation.”

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