The persisting lack of financing for sustainable development is worsening in 2025. With ODA falling for the first time in five years (down 7.1% in 2024), and a stagnant overall FDI to developing economies, with declines in 2024 observed in Latin America and the Caribbean (-12%) and Asia (-3%), as well as a drop of SDG-related investments (-26%), heads of state and government gather at FfD4 this year to discuss how to reshape the global financial architecture for sustainable development. South-South cooperation, grounded in peer-to-peer partnerships, knowledge exchange and non-financial support, plays a critical role in sustainable development for all, reinforcing other mechanisms, especially through mutual support, cooperation and knowledge sharing. The Bridgetown Covenant -—
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—- strongly emphasized the essential contribution of ODA, private investment, and South-South and triangular cooperation, in addressing the challenges related to development finance, including mounting debt of the most vulnerable economies.
Approaching UNCTAD 16, redefining international support to developing countries is high on the agenda. The following chapters address related challenges:
- Bringing South-South cooperation into focus: the journey to measurement
- With falling foreign direct investment, investment-promoting regimes increasingly more important to reach the SDGs
- Costlier debt servicing undermines the achievement of the SDGs
- Measuring illicit financial flows for stronger domestic resources
Early pilots showcase non-financial support is an essential South-South cooperation modality.
Investments in SDG-related sectors dropped 26% globally in 2024.
The external debt of developing economies reached $11.7 trillion in 2024.
Without reliable data, government efforts risk remaining ineffective or inadequate.
References
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The process of structural transformation – reallocation of production factors from low-productivity, labour-intensive, and polluting activities to higher-productivity, skill-intensive, and sustainable ones -—
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—- – is central to enhancing productivity and incomes to mitigate vulnerability to market shocks. With no sign of further industrialization in Africa and LDCs and stalled progress in manufacturing in most vulnerable economies, coupled with challenges in their digitalization, the role of digital technologies becomes even more important in diversifying economies and building resilient systems that are open, inclusive, and secure and benefit everyone. “Transforming the economies through diversification” is a critical element for inclusive prosperity -—
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The two sections of this chapter discuss these issues drawing on SDG indicators and other official statistics:
- Structural transformation to mitigate persistent technology gap
- Digital technologies are key to economic diversification
LDCs not on track to meet their SDG 9.2 target by 2030 in manufacturing value added and employment.
In 2024, the price of a mobile broadband subscription was equivalent to 5% of per capita GNI in LDCs.
References
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In 1964, when UNCTAD was created, the risk of ecological disaster was hardly on the international agenda. Today, as we prepare for UNCTAD 16, persisting increases in greenhouse gas emissions threaten development progress and future generations’ opportunities to live in a sustainable world. Transport infrastructure, and in particular ports, are increasingly susceptible to climate-driven extremes, making adaptation and resilience building increasingly urgent. We must change course. Continuing the trajectory of climate change, biodiversity loss, pollution and ecosystems degradation will unravel progress on the SDGs, exacerbating hunger, poverty, conflict, disasters, and health crises.
The Bridgetown Covenant -—
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—- emphasizes the need to enhance the sustainability and resilience of transport infrastructure and services, and to decouple economic growth from environmental degradation and greenhouse gas emissions. It advocates for promoting sustainable energy and providing developing countries access to environmentally sound technologies and recognises the importance of conservation and sustainable use of oceans, seas and marine resources, as key strategies for implementing the 2030 Agenda and achieving a sustainable economy. The two sections of this chapter discuss these sustainability and resilience issues drawing on SDG indicators and other official statistics:
- Uncertainty and disruptions are affecting maritime transport, its sustainability and resilience
- Emissions growth continues, threatening the Least Developed Countries the most
Weather and climate-driven extremes pose increasing risks for global ports, making adaptation, resilience-building and DRR an increasingly urgent imperative.
If all regions were able to reduce their carbon intensity of GDP to around 200 g/$, global annual emissions would reduce by nearly 45%.
70% of the world’s disaster fatalities occur in LDCs.
References
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Bridging the financing gap to achieve the SDGs and facilitate long-term economic transformation requires effective mobilization and utilization of various financing sources. Many developing economies face challenges in mobilizing sufficient funds, often hindered by their inability to secure affordable borrowing for investment. As they transition to higher income groups, losing eligibility for concessional finance (or part thereof) can exacerbate these challenges, creating a greater incentive to engage in South-South cooperation, but also reliance on private financial markets.
Continued decline in foreign direct investment to developing economies
Global FDI flows reached an estimated $1.5 trillion in 2024, an apparent increase of 4%. However, this headline figure is distorted by financial flows routed through European conduit economies1. Excluding these intermediary flows, global FDI actually fell by about 11% year-on-year -—
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—-. Global volatility of FDI appears to be flatlining in recent years, however FDI flows to developing economies, after having exhibited a flat trend since 2010, experienced a sharp increase in 2021-2022 (figure 1). 2023 saw a drop in FDI and 2024 remained flat compared to the year before for the global South, undermining progress on the SDGs, as these economies rely heavily on international financing. FDI declines in 2024 were observed in Latin America and the Caribbean (12%) and Asia (3%), while FDI increased in Africa, a record 75% rise -—
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Figure 1. Since the start of the 2030 Agenda, the only major FDI inflow jump to developing economies (2021-2022) is now losing momentumSource: -—
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Greenfield project announcements, primarily in industrial sectors, saw a moderate increase of 3% in number, yet fell 5% in value. Despite the drop, the value of greenfield projects remained high ($1.3 trillion), second only to the 2023 record value, driven primarily by investments in data centres and data processing. -—
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Investments in SDG-related sectors dropped sharply, by more than a quarter in 2024. Investment flows to developing economies for infrastructure fell 35%, renewable energy 31%, water and sanitation 30%, and agrifood systems 19%. Only the health and education sector saw growth (25%) -—
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Facilitating outward foreign direct investment key to achieving the SDGs
Mobilizing private sector finance is crucial to achieve the SDGs, with FDI playing a key role. FDI promotion is not solely the objective and responsibility of host economies; home economies can also support investment in developing economies and LDCs through dedicated OFDI promotion schemes. In this regard, SDG indicator 17.5.1 tracks the number of economies with OFDI promotion schemes for developing economies, including LDCs.
In 2024, at least 51 economies, including 21 emerging or developing economies, had in place at least one type of investment promotion mechanism for OFDI. This represented 71 per cent of developed economies and 15 per cent of developing economies. Among the economies with OFDI promotion mechanisms, an increasing number (27) had adopted schemes specifically targeting developing economies, including least developed economies. Globally, the most common mechanisms supporting OFDI were investment facilitation services (44 economies), followed by fiscal and financial support (38 economies), investment guarantees (35 economies) and State equity participation in foreign investment projects (25 economies) (figure 2).
Figure 2. Also in 2024, outward FDI promotion schemes towards developing economies, including LDCs, are predominantly provided by developed economiesSource: -—
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- Several European economies, including Ireland, Luxembourg, the Netherlands and Switzerland, where FDI statistics are significantly affected by conduit financial flows, reported large fluctuations and negative numbers in 2023 and 2024. Fewer negative numbers in 2024 exerted a net positive effect on global flows of about $230 billion. -—
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References
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Structural transformation, a pivotal driver of economic development, traces its roots in scientific advancements centuries ago, inducing a differentiation of economic activity and a shift from raw material extraction to manufacturing, followed by a transition to services as economies mature -—
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—- defines industrialized economies as those with manufacturing value added exceeding $2 500 per capita, adjusted to purchasing power parities.
Structural transformation enhances productivity and incomes while fostering diversification of production, thereby mitigating vulnerabilities to market shocks. The Bridgetown Covenant -—
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—- identifies “transforming the economies through diversification” as a critical element for inclusive prosperity. Access to requisite technologies, particularly in an increasingly digitalized landscape, is vital for successful structural transformation. The Covenant emphasizes that industrialization must align with sustainability and inclusiveness to realize the goals of the 2030 Agenda while ensuring equitable distribution of its benefits.
No sign of further industrialization in Africa and LDCs
In 2023, manufacturing value added per capita in developed economies amounted to $5 379 (at constant 2015 prices), significantly surpassing other regions (figure 1). It was 3.5 times higher than in developing Asia and Oceania ($1 522) and 4.5 times higher than in developing Latin America and the Caribbean ($1 186). It exceeded the value in Africa ($212) by 25 times.
Over the past two decades, manufacturing value added per capita in developing Asia and Oceania has steadily risen to 3.2 times its 2003 value. Latin America and the Caribbean experienced a slower decline over the last decade. As a result, the region was overtaken by Asia in 2018. Africa has seen an increase of 20% over 20 years. Its manufacturing value added per capita only recovered to $215 in 2022, about the same level as before the COVID-19 pandemic. Developed economies, despite disruptions from the global financial crisis and the COVID-19 pandemic, have generally exhibited modest and steady growth.
Figure 1. Manufacturing value added per capita: stable in most regions, rapid growth in Asia and OceaniaSource: UNCTAD calculation based on UNCTADstat -—
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LDCs behind the target path towards industrialization
In 2023, manufacturing value added per capita in LDCs averaged $178, at 2015 prices, 30 times less than the average of the developed world. Despite this gap, LDCs have seen steady growth, with manufacturing value added per capita already 3.8 times higher in 2023 compared to 2005, with an average annual growth rate of 7.8% (figure 1).
Regarding SDG target 9.2, with a focus on the manufacturing value added as a proportion of GDP, LDCs made progress, increasing from 10.5% in 2005 to 14.5% in 2023. However, during the COVID-19 pandemic, the share stagnated at around 15% (figure 2). If the SDG target of doubling LDCs manufacturing share in value added by 2030 is applied to the LDCs of today, this target is unlikely to be reached. The required annual increase from 2005 onwards was 0.4 percentage points, but the actual average increase until 2023 was only 0.2 percentage points.1
While the manufacturing employment share in the current LDCs has followed a trajectory closer to the target path than its value added share until 2013, the gap between the actual and target paths expanded since. Since 2013, the employment share of manufacturing in LDCs has remained stagnant at around 7.6%. The relatively constant employment shares in LDCs alongside increasing value added imply an overall improvement in productivity, which can be considered as encouraging. However, it is essential to recognize that these are weighted averages, and incomplete data coverage likely masks variations in manufacturing employment and value added among different LDCs.
Figure 2. LDCs far from reaching the target of doubling the manufacturing share of value added and employment by 2030Source: UNCTAD calculations based on Global SDG indicators database -—
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Note: Target and target path set with reference to the base year 2005.2
Global R&D intensity increased, with high concentration in a few economies
The R&D intensity − that is R&D spending in proportion to GDP (SDG indicator 9.5.1) − was estimated at 2.0% in 2022 for the world, according to the UNESCO Institute of Statistics. This represents a more than insignificant increase in R&D intensity, from 1.6% recorded for 2010. The highest intensity in 2022 was registered in Israel (6.0%), the Republic of Korea (5.2%), and the United States of America (3.6%). Among developing economies, the leading economy was China (2.6%). -—
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Figure 3. Declining government contribution to global R&D funding relative to the private sectorSource: OECD Main Science and Technology Indicators database -—
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Preliminary data for 2023 indicate that government support has been on the rise for energy and defense oriented R&D. Overall, government share of R&D spending was dropping while businesses' investment in R&D has been increasing. -—
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While governments tend to finance R&D activities oriented towards broader socio-economic goals, private funds may lean towards specific profit-oriented projects. In recent years, a major part of R&D funding was provided by business enterprises. Globally, their share was 58% in 2010, increasing to 65% in 2023 (figure 3). For some 8% of the total R&D value in 2023, the source of funds was not specified. The shares of private non-profit entities, higher education institutions, and sources abroad remained stable, accounting for 7%. The part provided for by governments dropped from 30% in 2010 to 19% in 2023 -—
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Notes
- Vanuatu, the Maldives, Cabo Verde, Samoa, Equatorial Guinea, Bhutan, and Sao Tome and Principe were LDCs in 2005 but have graduated since then, due to their progress in economic development -—
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References
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Infrastructure, including transport infrastructure, significantly impacts the attainment of all SDGs, influencing 92% of the 169 individual targets -—
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—-. Transport infrastructure and services facilitate trade, support global supply chains, propel growth, and promote social progress. While multimodality is essential for door-to-door delivery of goods, maritime transport dominates, accounting for over 80% of world merchandise trade -—
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Global maritime trade sustained as shipping and ports continue to navigate a shifting operating landscape
In 2023 and 2024, maritime transport and trade grappled with increased volatility and uncertainty against the backdrop of growing geopolitical risks and conflicts, heightened trade policy tensions, and climate change impacts, alongside an accelerated sustainability, decarbonization and digitalization global policy agenda -—
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In 2023, maritime trade remained almost constant, while the long-term trend is increasing, at an average annual growth rate of 2.7% between 2000 and 2023. Volumes stood at 11.6 billion tons in 2023, below the 2021 levels, but only by 85 million tons (figure 1). Volumes are projected to grow by 2.0% in 2024 and on average by 2.4%, annually, until 2029 -—
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Figure 1. Global maritime trade resilient amid disruptionSource: UNCTADstat -—
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Historically, developing economies served mainly as loading centres of low-value high-volume commodities such as oil and raw materials. Starting in 2000s, their maritime trade profiles have been shifting with their influence increasing and their maritime import share expanding rapidly. Since 2014, this share has been exceeding their share of exports (figure 2). Developing economies have now become major world maritime importers and exporters -—
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Figure 2. Importance of developing economies as seaborne trade importers risingSource: UNCTADstat -—
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Container port traffic growing globally, despite regional variations and temporal fluctuations
In 2023, world container ports handled 858.2 million TEU, 217 million TEU more cargo than a decade earlier (see figure 3). In the last years, ports faced several disruptions including due to strikes of port workers, truck drivers and logistics operators, congestion caused by vessel rerouting, and a shift in port call patterns. As maritime transport decarbonization and energy transition goals solidify, ports are also repositioning themselves to enable the energy transition in maritime transport -—
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Figure 3. Volumes handled at world container ports risingSource: UNCTADstat -—
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Weather and climate-driven extreme events pose increasing risks for global ports, making adaptation, resilience-building and disaster risk reduction an urgent imperative
Ports are critical for global trade and sustainable development but are increasingly at risk of climate change impacts, ranging from heat waves to heavy precipitation, flash floods, extreme winds and waves, for example long waves and associated swell, that endanger the operation of cranes and can render access to ports more hazardous -—
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Port defences are designed to withstand ESLs with a certain return period, commonly the 1-in-100 years ESL (ESL100), estimated at the time of design or construction. ESLs of a magnitude so far expected to occur once a century, will occur much more often under climate change, significantly increasing the flood hazard for global ports, including some of the 100 largest container ports (figure 4, see also -—
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—-. Extreme weather events which are projected to increase in frequency or severity under global warming -—
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—- not only cause significant damage but also disrupt global supply chains, leading to extensive economic costs and losses -—
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—-. Knowledge gaps persist, however, regarding individual coastal transport facilities’ vulnerabilities and exposure, hampering effective prevention and underlining the need for further research, guidance and capacity-building -—
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Figure 4. With global temperatures rising, ports will more frequently be exposed to extreme sea-levels of a magnitude previously expected to occur once a centurySource: UNCTAD calculations. Data collation and treatment by I Monioudi, University of the Aegean. ESL100 projections for global coastline from -—
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Notes: Global warming scenarios SWL are presented in degrees Celsius above pre-industrial times. The Tr (years) - return period scale shows how frequent the baseline (mean of the 1980–2014 period) 1-in-100 years extreme sea level, ESL100, is projected to become for each port. Lower values indicate that the baseline ESL100 is projected to occur more frequently. Ports displayed are the 100 biggest ports in terms of container port throughput in 2021 -—
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—-. The ports are ordered according to region and exposure in the SWL 1.5°C scenario. The size of the circles is proportional to container port throughput in volume, in 2021.
Scaling up EWS early warning systems -—
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—-, as discussed in Resilience and risk, will be critical for increased preparedness and mitigation of impacts. Flexible and adaptive infrastructure and operations as well as engineered redundancy are crucial to improve resilience -—
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—-. While progress has been made in technical guidance -—
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—-. Urgent steps are required to bolster affordable climate adaptation finance for ports in developing countries -—
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Notes
- For more analysis of structural and cyclical changes affecting seaborne trade, ports and shipping see the annual UNCTAD flagship report Review of Maritime Transport -—
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References
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Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
Digitalization has changed the way people produce, consume, trade and live. Narrowing the technological gap and closing the digital divide between and within developed and developing countries provides opportunities for improving incomes and resilience, as well as reducing the vulnerabilities, of the poorest – and in particular of women and youth. Past and ongoing crises have highlighted the role of digital technologies in diversifying economies and building resilient systems that are open, inclusive, and secure and benefit everyone.
It all starts with getting people and businesses online
To be able to engage in and benefit from the digital economy and digital trade, individuals and businesses must first be online. This means being covered by Internet infrastructure that is sufficiently fast and reliable, and furthermore by electricity infrastructure to power digital devices. By 2024, 92% of world population was covered by 4G mobile networks, double the share in 2015 -—
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—-. However, there is considerable variation in 4G deployment between regions; while 4G is available to all in Eastern Asia and in Europe, only 54% of people in sub-Saharan Africa live in areas covered by 4G networks (map 1). Furthermore, mobile networks continue to evolve, with 4G being superseded by 5G technology which covered 51% of the global population as of 2024 -—
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—-. The widest roll-out was in Europe, where 72% of the population was covered, followed by the Americas (63%) and the Asia-Pacific (62%). However, deployment has barely begun in many countries.
Map 1. More than half of the world’s population now covered by 5G, but deployment lags in some regionsSource: UNCTAD calculations based on -—
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Coverage alone is not enough
While 96% of the world population is covered by mobile broadband (3G or above) networks, many other factors create a gap between those who could access the Internet and those who do use it. In 2024, two thirds of the world’s population used the Internet, leaving 2.6 billion people offline. Furthermore, while almost all people in developed countries are online, only 35% of those in the least developed countries (LDCs) use the Internet -—
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One key reason is that the costs involved in getting online can be prohibitive for many. In 2024, the annual cost of a mobile broadband subscription was equivalent to 4.6% of per capita GNI in LDCs while a fixed broadband subscription equated to one sixth of GNI per capita -—
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—- – both exhibiting a slight decrease compared to previous year. Given disparities in income distribution within countries, for many people connectivity will be even less affordable. Furthermore, the digital devices required to access the Internet, such as smartphones, also need to be available and affordable.
Additionally, the skills required to use the Internet must be sufficiently widespread and available amongst the population, and people need to be aware of the opportunities of the digital economy and of digital trade, especially those working at firms that stand to benefit from digital transformation. Finally, the speed provided by Internet connections and fixed line technologies, such as the fixed broadband, matters -—
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Digital technologies offer a vital opportunity for economic diversification
Digital technologies, including the Internet, underpin e-commerce – in which buyers place and sellers receive orders online. Additionally, they enable instantaneous remote delivery of services directly into businesses and homes. Both digitally ordered and digitally delivered transactions increasingly take place across borders. The possibility of engaging in such digital trade offers new opportunities for the diversification of developing economies. Digitally deliverable services now account for over half of all services exports worldwide. Their share grew especially during the disruptions of the COVID-19 pandemic, then declined as exports of other services recovered, and stabilized in 2023, at a higher level than before the pandemic (figure 1).
Figure 1. Digitally deliverable services have increased their share in total services trade over the last 5 yearsSource: UNCTADstat -—
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Note: Digitally deliverable services are services that can be delivered remotely through computer networks. The figures in the graph cover: insurance and pension services; financial services; charges for the use of intellectual property; telecommunications, computer and information services; other business services; and audio-visual and related services.
Seizing the opportunities of digital trade requires not only investments in ICT connectivity but also actions to boost digital skills and awareness of the opportunities and risks associated with digital trade. Measures to facilitate digitally ordered goods transiting the border and regulatory actions to encourage digital payments, ensuring privacy and data protection, as well as the establishment of channels for recourse in case of loss or detriment related to digital trade, represent further enabling factors -—
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References
Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.
Donec tincidunt vel mauris a dignissim. Curabitur sodales nunc id vestibulum tempor. Nunc tortor orci, sodales nec eros eget.