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Senior Research Advisor Hosono Sheds Light on Demand from BOP at Industrial Development Report 2018 Launch Event

May 11, 2018

The panel discussion inspired a lively exchange of opinions

On April 18, 2018, the United Nations Industrial Development Organization (UNIDO) held the Industrial Development Report (IDR) 2018 Launch Event at the United Nations University Headquarters in Tokyo. Akio Hosono, Senior Research Advisor of JICA Research Institute, participated in the panel discussion.

UNIDO issues the IDR every two years, and the theme for IDR 2018 is "Demand for Manufacturing: Driving Inclusive and Sustainable Industrial Development."

UNIDO Director General Li Yong kicked off the event by noting the significance of this year's report, which adds a demand-side perspective to the analysis of industrial development. He said that IDR 2018 provides some directions for policy interventions for inclusive and sustainable industrial development.

Then, Cecilia Ugaz, Director of the Department of Policy, Research and Statistics (PRS), UNIDO, and Alejandro Lavopa, Industrial Development Analyst of PRS, UNIDO, reported the key findings, focusing on the "virtuous circle" created by industrial development and demand. Ugaz said that industrialization improves our living standards, as shown by innovative new products like mobile phones. She explained that an increase in income creates new demand, and diversification of demand facilitates efforts on the supply side to optimize production and develop innovative products. Then, through time, products become more popular, affordable and available to an increasing number of people. This sets in motion a virtuous circle that brings growth and profit to both the consumer and industrial development. She said it is important to reduce the negative impact on the environment through technological innovation and development of environmental goods, and shifting consumption patterns are key to rendering the virtuous circle sustainable.

After this was the panel discussion with Hosono, Tatsufumi Yamagata, Chief Senior Researcher of the Development Studies Center, Institute of Developing Economies, Japan External Trade Organization, Masachika Suzuki, Professor at Sophia University and Hossam Negm, First Secretary and Head of the Economic & Commercial Bureau, Embassy of Egypt. Each provided knowledge on industrial development fields of their specialty.

Akio Hosono, Senior Research Advisor of JICA Research Institute (right) and Cecilia Ugaz, Director of the Department of Policy, Research and Statistics, UNIDO

Hosono said the challenge for the demand side of industrial development is the enormous base of the pyramid (BOP) that falls outside the virtuous circle, and how to incorporate this tier. Specifically, the problem is the lack of products that truly satisfy the needs of, and are affordable for, the poor in developing countries. He introduced the "Olyset Net," a long-lasting insecticide-treated mosquito net developed by Sumitomo Chemical Co., Ltd., as one example solution. The price was brought down to an affordable level for the poor with the support of the Japan Bank for International Cooperation (JBIC). With cooperation from the World Health Organization (WHO) and United Nations International Children's Fund (UNICEF), public awareness of the "Olyset Net" was raised through campaigns and an accessible distribution network was created for the poor, such as gasoline stations. He said partnerships at scale are as important as good policies. Furthermore, he talked of the importance of changing corporate management systems on the supply side in order to allow the virtuous circle of industrial development to function, introducing the examples of Kaizen and Total Quality Management (TQM) as an effective approach.

The panel discussion inspired a lively exchange of opinions, including many questions and comments such as, "Isn't it difficult for consumers in developing countries to influence the supply side because of their weak purchasing power?" and, "How can we equally distribute income to consumers in developing countries?"

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