Small and medium-sized enterprises (SMEs) in developing countries can generate significant growth and create jobs by seizing a potential $1.6 trillion market opportunity in clean technology.
24 September 2014
infoDev/World Bank Group in collaboration with the Carbon Trust have quantified for the first time, the economic opportunities that small businesses can seize in clean and climate friendly technology sectors in developing countries. Over the next ten years, investments in clean technologies in emerging markets are estimated to exceed $6 trillion, of which $1.6 trillion represent business opportunities for small and medium enterprises (SMEs), key drivers of technology innovation and job creation.
The new report titled “Building Competitive Green Industries: the Climate and Clean Technology Opportunity for Developing Countries” identifies China, Latin America and Sub-Saharan Africa as the top three markets in the developing world for clean technology SMEs, with an expected market size of $415 billion, $349 billion, and $235 billion respectively.The most promising opportunities are in wastewater treatment, onshore wind, solar panels, electric vehicles, and small hydro.
Data analysis and case studies from Kenya and India show how these market opportunities have also important social impacts. In Kenya, for instance, the roughly 80 per cent of the population not served by the electricity grid represents a vast market for new climate and clean technology solutions.
Local entrepreneurs and SMEs are deriving innovative solutions in solar and biogas technologies.
The report, published by infoDev, a global innovation and entrepreneurship program in the World Bank Group, also highlights the important link between competitive green industries and job creation. Clean technology jobs compare favorably to jobs in other sectors, requiring more skill and delivering better pay and on-the-job safety.
To help countries unlock this environmental and economic potential, the report, for which the Carbon Trust provided the technical analysis, identified a set of actions that can be implemented to build local green industries. The study provides a range of practical instruments to support SMEs in key areas such as market development, innovative finance, entrepreneurship and business acceleration, technology development, and the legal and regulatory framework. These policy considerations are illustrated through case studies of national programs in South Korea, India, Thailand, and Ethiopia.
Over the coming decade the deployment of clean technologies represents a huge opportunity for developing countries to reap substantial economic rewards – developing local industries and creating jobs and exports as well as positive environmental outcomes. Our analysis shows that SMEs have a key role to play in this and could access around a quarter of the $6 trillion market opportunity. We are already seeing real innovation from developing world SMEs in adapting products for local needs and developing new business models. Enabling and accelerating this should be a priority for policymakers at global and local levels.
James Rawlins, Associate Director at the Carbon Trust
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