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Applied Energy 265 (2020) 114755

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Applied Energy
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Composite index as a measure on achieving Sustainable Development Goal 9 T


(SDG-9) industry-related targets: The SDG-9 index

Petra Kynčlováa, , Shyam Upadhyayaa, Thomas Niceb
a
United Nations Industrial Development Organization (UNIDO), Wagramerstr. 5, P.O. Box 300, A-1400 Vienna, Austria
b
Humboldt University Berlin, Centre for Rural Development, Hessische Strasse 2-3, 10115 Berlin, Germany

H I GH L IG H T S

• The paper introduces an index to measure the progress towards meeting the industry-related targets of the 2030 Agenda.
• The SDG-9 index benchmarks industrial performance while preserving the environment and promoting inclusiveness.
• The final ranking compares performance of 128 economies over the period 2000–2016.
• Economic growth should be accompanied by technological changes and efficient use of natural resources.

A R T I C LE I N FO A B S T R A C T

Keywords: This article introduces the SDG-9 index as a measure of country progress towards achieving industry-related
Inclusive and sustainable industrial targets of Sustainable Development Goal 9 (SDG-9). The SDG-9 index represents a comprehensive but
development straightforward approach to assess the extent to which countries have industrialized while promoting social
Sustainable Development Goals inclusiveness and minimizing natural resource use and environmental impacts. The selection of indicators is
Composite index
based on the global indicator framework for the Goals and targets of the 2030 Agenda adopted by the United
Nations General Assembly. The resulting SDG-9 index benchmarks inclusive and sustainable industrial devel-
opment in 128 economies over the period 2000–2016. In general, industrialized economies outperform other
countries, with the top five leading the 2016 ranking being Ireland, Germany, the Republic of Korea, Switzerland
and Japan. The calculated scores of the SDG-9 index can show in which dimensions countries represent the
leaders or lag behind other economies. Thus, the SDG-9 index forms a valuable tool for policy makers and
analysts.

1. Introduction countries meet their increasing energy demands and loosen the link
between economic growth and environmental degradation, such as
The Lima Declaration, adopted by Member States of the United climate change [4].
Nations Industrial Development Organization (UNIDO) introduced a Although industrialization contributes to economic growth, its im-
new global vision of inclusive and sustainable industrial development pact differs depending on the country’s stage of development [5]. In-
(ISID) in December 2013, promoting the role of industrialization as a dustrial growth in developed economies will largely depend on the level
driver for development [1]. Industrialization is a dynamic economic of adoption of new technologies, intelligent production processes and
process that generates income and employment, facilitates trade and on limiting the impact of industrial production on the local natural
promotes efficient resource use. Although the world is facing climate environment and the global climate [6]. For developing economies,
change challenges, industrial development still remains a major driver industrialization implies structural transformation of the economy from
of poverty alleviation and shared prosperity [2]. Through innovation traditional sectors such as agriculture and fishery to a modern manu-
and technological progress, ISID contributes to reaching environmental facturing industry based on innovation and technology [7]. Such an
objectives, such as greater resource and energy efficiency [3]. Im- expansion of the manufacturing sector creates jobs, helps reduce in-
proving energy efficiency in industry is one of the most cost-effective come poverty, introduces and promotes new technologies and produces
measures to help supply-constrained developing and emerging essential goods and services for the market [8]. Manufacturing


Corresponding author.
E-mail addresses: P.Kynclova@unido.org (P. Kynčlová), S.Upadhyaya@unido.org (S. Upadhyaya), nicethom@hu-berlin.de (T. Nice).

https://doi.org/10.1016/j.apenergy.2020.114755
Received 20 September 2019; Received in revised form 20 February 2020; Accepted 26 February 2020
0306-2619/ © 2020 Elsevier Ltd. All rights reserved.
P. Kynčlová, et al. Applied Energy 265 (2020) 114755

emissions largely result from energy generation – directly through fossil incorporate a sufficient number of indicators so that multi-
fuel combustion or indirectly through electricity use. As lower middle- dimensionality is captured without compromising the interpretability
income countries typically have the highest emissions intensities due to of the index. Hence, the selection of underlying indicators is the result
the technologies used and the type of production [9], sustainable in- of a trade-off between possible redundancies caused by overlapping
dustrialization paths are particularly relevant to these countries’ de- information and the risk of losing information.
velopment paths [10]. Composite indices, which facilitate assessments of country perfor-
On 25 November 2015, the United Nations General Assembly mance rather than identification of common trends across many sepa-
adopted the 2030 Development Agenda “Transforming our world: the rate indicators, may be helpful in setting policy priorities [21]. They
2030 Agenda for Sustainable Development” [11]. The 2030 Agenda can, however, also send misleading policy messages if they are poorly
calls for collaborative partnerships on all levels and emphasizes the constructed or misinterpreted [22]. Since composite indices facilitate
achievement of sustainable development for all by building on the the interpretation of many separate indicators into one single measure,
principle of “leaving no one behind”. The new Goals and targets, known further analysis is necessary to identify the main drivers of the com-
as Sustainable Development Goals (SDGs), came into effect on 1 Jan- posite indicator results. Composite measures are thus better considered
uary 2016, becoming the main reference point for development policies as invitations to closer investigation of the various components that
to foster sustainable development in all dimensions – economic, social underlie them [23].
and environmental – until 2030. ISID is recognized under Goal 9, As the 2030 Agenda for Sustainable Development represents an
calling for “Building resilient infrastructure, promote inclusive and essential blueprint for development policies and to enable monitoring
sustainable industrialization and foster innovation”. progress towards achieving SDGs, the global indicator framework for
The 2030 Agenda provides a multidimensional view of development the Goals and targets was established by the Inter-agency and Expert
resulting in possible synergies or trade-offs among the 17 Goals, for Group on SDG Indicators (IAEG-SDGs). This framework introduces a
instance, ISID as potential synergy with the target 7.3 on energy in- wide range of statistical and non-statistical indicators to track progress
tensity [12]. Hence, achieving the SDGs will require profound struc- on the SDGs at the global level. It was agreed upon by the UN Statistical
tural changes across all segments of society [13]. A comprehensive Commission in March 2017 and subsequently adopted by the General
assessment of global sustainability must not only consider economic Assembly on 6 July 2017 [24]. The proposed SDG-9 index introduced in
stability and environmental integrity but also the social equity of well- this paper is exclusively constructed on the basis of those indicators to
being, which will ensure lasting prosperity for all people on the planet provide a new measure of ISID. Such a constructed composite index
[14]. allows countries and policy makers measure the performance on
Rapid population growth in the Global South and increasing pres- achieving industry-related targets of SDG 9. The SDG-9 index also gives
sure on the environment are the two major challenges for global de- insights regarding which dimensions of sustainable industrial devel-
velopment. Economic development is closely linked with energy con- opment countries lag behind or represent leaders.
sumption and thus a significant increase in carbon dioxide emissions The remainder of this paper is structured as follows. Following the
[15]. However, the mitigation of carbon dioxide emissions is very costly introduction, Section 2 provides an overview of existing indices that
and might not be affordable for developing countries as it relies on aim to capture progress on ISID. Section 3 presents the methodology
extensive investments in low-carbon climate-resilient industrial infra- and computation of the SDG-9 index. Section 4 describes the main
structure and production technologies. Some energy sustainability findings by applying the index methodology together with a more de-
strategies call for building an energy-efficient society by reducing en- tailed analysis of the respective dimensions. Section 5 compares the
ergy requirements in industrial production, and thus slowing down the SDG-9 index 2016 with other indices that are based on a similar con-
increase in global energy consumption [16,17]. ceptual framework. The conclusions and ideas for future research are
Energy decarbonization and sustainable industry has been identified summarized in Section 6.
as one of the six key transformations that need to take place to achieve
the SDGs. Three aspects are highlighted – decarbonization of electricity 2. Review of existing composite indices on inclusive and
generation by shifting from fossil fuels to zero-carbon sources, im- sustainable industrialization
proving energy efficiency in final energy use and electrification of
current uses of fossil fuels outside power generation [13]. The adoption of the 2030 Sustainable Development Agenda has
These environmental objectives remain crucial for a number of initiated a number of efforts to rank countries using composite in-
emerging concepts towards a green energy economy transformation, dicators to capture their progress towards achieving all SDGs or their
which gained increased policy attention after the 2008–2009 global specific dimensions.
financial crisis [18]. The green economy paradigm exemplifies a The SDG index and Dashboards [25] track countries’ progress to-
strategy to enhance economic growth and job creation through the wards achieving all SDGs. The final SDG index selects indicators from
sustainable use of natural resources, energy efficiency, and valuation of the global indicator framework. The assigned score shows a country’s
ecosystem services [19]. It envisages a world in which industrial sectors position between the worst and the best result. The overall index in-
minimize waste in every form, utilize renewable resources as input dicates where a country stands on average compared to the best pos-
materials and fuel, and take every possible precaution to avoid harming sible result across all 17 SDGs. The methodology sets an upper bound
workers, communities, the climate, or the environment. Moreover, for each indicator to provide a comprehensive assessment of the dis-
structural change towards less carbon intensive sources, such as gas and tance to the targets based on the most recent data available. Capturing
renewables, implies a gain in employment [20]. all 17 Goals is a tremendous feat given the large amount of missing
Sustainable development is a multi-dimensional process that can be data, particularly in the case of environmental indicators. Moreover,
measured by a number of indicators representing its different dimen- cross-country differences in the selection of indicators, data availability
sions. Because benchmarking country progress on various targets cor- and methodologies make international comparisons difficult. The SDG
responding to different dimensions might be too difficult, an aggregated index excludes indicators to which quantitative thresholds are not ap-
measure of a country’s relative position can be useful as a point of re- plicable to all countries, for instance, SDG-9 indicators that are relevant
ference for policy formulation and advocacy. Policy analysts and policy for manufacturing industries. Although manufacturing may be useful
makers therefore turn to composite indicators, which are better for developing long-term strategies for (re-) industrialization in in-
equipped to capture the multi-dimensional nature of sustainable in- dividual countries, it is not possible to define a common global
dustrial development. threshold for such strategies.
If composite indices are to measure progress, they need to Other composite indicators have been developed trying to capture

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countries’ economic development with a special focus on its impact on 3. Design of the SDG-9 index: methodology and computation
another given dimension such as inclusiveness, sustainability, structural
change or the level of investments [26]. 3.1. Development of conceptual framework
The Inclusive Development Index (IDI) published by the World
Economic Forum (WEF) [27] monitors countries’ progress towards The SDGs have become the world’s shared action plan for achieving
overall economic development and does not only consider economic sustainable development; but countries need greater clarity on how to
growth but its inclusiveness, intergenerational equity and sustainability operationalize and track progress towards realizing all 17 Goals.
as well. The WEF’s report demonstrates that the traditional measure of Moreover, the achievement of the SDGs must also be supported by other
growth, i.e. gross domestic product (GDP), does not reflect the popu- stakeholders such as businesses, academia, and civil society. Six
lation’s well-being. In the past five years, nearly one third of the 103 transformations to achieve the SDGs were introduced to help identify
economies included in the IDI saw a drop in their score, despite GDP per priority investments and regulatory challenges, calling for action all
capita growth. Although the index provides a useful approach to stakeholders to work together [13].
benchmarking the inclusive economic development of countries, it does One of these transformations entails energy decarbonization and
not investigate economic activities by sector (for instance, manu- sustainable industry, with the aim of promoting changes in consump-
facturing). tion and production patterns. This can contribute to a decoupling of
The Partnership for Action on Green Economy (PAGE) has in- human well-being from environmental degradation through circularity,
troduced the Green Economy Progress (GEP) Measurement Framework which involves the reuse and recycling of materials, among other
[28], which is composed of a GEP Index and Dashboard of Sustain- strategies [13]. Such a transformation is strongly associated with
ability indicators. The GEP index tracks countries’ progress in achieving changes in the structure of the economy; the manufacturing industry
the transition to an inclusive green economy at the national and global plays a key role in this process [5]. Manufacturing is clearly a driver of
level. It captures characteristics of the green economy by including economic growth as it creates jobs and generates income [33] but it also
multidimensional indicators such as the link between health and the poses challenges in terms of its effect on natural resource depletion and
environment. Although the GEP index includes “economy” in its name, climate change [34].
none of its indicators are economic or employment variables. From the perspective of technology and innovation, high-tech in-
Moll de Alba and Todorov [29] developed the Green Industrial dustries can be more environmentally sustainable because they pollute
Performance (GIP) index to analyse the performance of countries in less than other industries [35]. The recycling industry, for example, is
different dimensions of green manufacturing. They classify green the best candidate for achieving sustained growth, as it generates em-
manufacturing products and services based on a list derived from the ployment and equity and is environmentally friendly [36]. Chakraborty
U.S. Department of Commerce [30] to benchmark countries’ perfor- and Mazzanti [37] found that increasing research and development
mance in three dimensions: (i) the capacity to produce and export green investment in green energy technologies is essential for reducing energy
manufactured goods, (ii) the role of green manufacturing, and (iii) so- intensity.
cial and environmental aspects of green manufacturing. The objective of developing a new composite measure is to provide
Lin et al. [31] introduced the Inclusive Sustainable Transformation a tool for researchers and policy makers to evaluate countries’ perfor-
(IST) index, which considers structural change to be the foundation of mance based on how successful economies industrialize while preser-
sustained and inclusive growth and the condition for achieving the ving the environment and simultaneously promote inclusiveness. Since
SDGs. The IST index ranks countries based on the strength of their ISID is a multidimensional process that cannot be captured by a single
manufacturing sector and of their exports, their technological expertise, indicator, constructing a composite indicator is the best solution for a
the equity and inclusiveness of their labour market and their environ- benchmarking exercise that analyses the performance of countries
mental performance. along the various dimensions of ISID. Such a constructed index will also
The structural modernization index was developed by Lavopa and help countries track their progress in implementing the six transfor-
Szirmai [32] to investigate the structural trajectories followed by dif- mations outlined by Sachs et al. [13].
ferent countries on their path towards achieving sustainable develop- An intuitive solution for constructing a composite measure to
ment. The trajectories of economic development are analysed in a monitor the progress of countries towards achieving ISID is using in-
single measure that is based on two dimensions, namely the process of dicators that are assigned to the industry-related targets under Goal 9 of
structural modernization and the ability of countries to escape poverty the 2030 Agenda for Sustainable Development. The global indicator
and middle-income traps. framework includes indicators covering all three dimensions and a new
UNIDO developed a CO2-adjusted Competitive Industrial composite measure can thereby be introduced. The index is called the
Performance (CIP) index in 2016, constructed on an experimental basis, SDG-9 index and explores the level and growth patterns of manu-
to complement its CIP index edition [9]. The CIP index monitors three facturing activities and their impact on production, employment as well
dimensions of countries’ industrial performance: (i) their capacity to as on the environment. Due to the small number of individual in-
produce and export manufactured goods, (ii) their level of technolo- dicators, the index can be easily interpreted by any user and thus caters
gical deepening and upgrading, and (iii) the impact of the country’s to the general public [22].
economy on the world market. The CO2-adjusted CIP index represents
an additional instrument in cross-country comparisons of competitive- 3.2. Selection of indicators
ness by taking environmental externalities into account. The CIP index’s
adjustment to include carbon dioxide (CO2) emissions from manu- As mentioned above, the data is based on the global indicator fra-
facturing rearranges the CIP ranking to the benefit of countries that mework of the 2030 Agenda for Sustainable Development. The aim of
effectively protect natural capital through measures of pollution constructing the SDG-9 index is to measure countries’ progress on ISID,
abatement in manufacturing. thus the focus is on indicators assigned to the industry-related targets
This review reveals that no existing index takes account of the under Goal 9. The overview of SDG-9 targets and indicators is presented
targets of the 2030 Agenda as a global blueprint for development po- in Table 2.
licies and with a particular focus on the sustainability and inclusiveness Four targets building on seven indicators are directly linked to the
of the manufacturing sector. process of industrialization. These indicators refer to all three dimen-
sions of ISID - economic (9.2.1a, 9.2.1b, 9.3.1, 9.3.2, 9.b.1), social
(9.2.2) and environmental (9.4.1). Although the target 9.5 calls for
enhancing scientific research and upgrading industries’ technological

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capabilities, the indicators assigned to this target by the IAEG-SDGs manufacturing production in the world since production capacity is
refer to the economy as a whole. Moreover, data disaggregated by concentrated in a few countries including China, USA, Japan and Ger-
economic activity are not available to carry out a global comparison. As many. All normalized indicators reveal positive cross-correlation pat-
the SDG-9 index was designed to cover the industry-related targets, terns resulting in a more robust composite measure and rather low
indicators 9.5.1 and 9.5.2 were not considered in the construction sensitivity when changing weights [40].
process. The correlation structure of the underlying indicators can be further
The IAEG-SDGs classifies indicators into Tier I, II and III depending investigated through multivariate statistical methods such as a prin-
on the availability of a precise statistical methodology and institutional cipal component analysis (PCA) [22]. PCA is a widely used method
capacity of countries to compile the required data.1 All industry-related aiming to reduce the dimensionality of complex datasets by trans-
indicators are classified as Tier I or Tier II. The indicators assigned to forming a large set of variables into a smaller one that preserves most of
the target 9.3 reflecting the role of small-scale industrial and other the original information. The reduced data set is easier to visualize and
enterprises were reclassified from Tier III at the sixth IAEG-SDGs explore [41].
meeting in November 2017. The reporting mechanism is currently Fig. 2 illustrates a biplot using the results from the PCA. A biplot is a
being established starting with an initial data collection based on the widely used statistical tool to visualize the resulting loadings and scores
approved methodological concept. Due to the limited number of of a dimension reduction technique applied to multivariate data. A
countries reporting on the target 9.3, these indicators were excluded resulting biplot represents a simple two-variate scatterplot displaying
from the construction of the SDG-9 index. both observations and variables in one graph. The observations
The indicators selected for the compilation of the SDG-9 index are (countries) are represented as data points while the variables (nor-
manufacturing value added (MVA) as a proportion of GDP (MVAsh) and malized indicators) are displayed as arrows. The biplot for the data set
per capita (MVApc), manufacturing employment as a proportion of total from 2016 (Fig. 2) is based on the first two principal components ex-
employment (EMP), CO2 emissions from manufacturing industries per plaining 82.7% of the total variance.
unit of MVA (CO2) and the share of medium–high and high-tech The biplot reveals already mentioned correlation patterns, as all
manufacturing value added in total value added (MHT). The data used variables are positively correlated considering that they all point in the
to construct the composite indicator are sourced from the SDG Global same direction. Arrows close to each other, for instance the normalized
Database, which offers internationally comparable data series [38]. The MVApc and the normalized MHT or the normalized EMP and the nor-
final dataset are unbalanced panel data. The coverage of indicators and malized MVAsh respectively, show high positive correlations. This
their sources are shown in Table 1. The number of countries corre- variable is particularly dominant in countries located close to the ar-
sponds to the total number of countries with data entries across all rows, for instance China has the second highest share of MVA in GDP
years from 2000 to 2018. The 2030 Agenda aims to provide global after Ireland and Singapore has the highest share of medium–high and
monitoring over the next 15 years starting from 2015. The complete high-tech MVA. The resulting groups of countries with respect to single
dataset from 2000 to 2016 is used for our preliminary analysis followed variables (indicators) as depicted in the biplot are observed in the final
by the construction of the SDG-9 index. ranking of the SDG-9 index.
The performance of countries is also analysed using the UNIDO
country groupings [39], i.e. industrialized economies, emerging in- 3.3. Methodology
dustrial economies, other developing economies and least developed
countries (LDCs). The SDG-9 index analysis is presented in the next Constructing the final SDG-9 composite indicator requires a nor-
chapter and it focuses on performance by dimension and by develop- malization of indicators to make them comparable. The OECD
ment group in the year 2016. Handbook on Composite Indicators [22] provides a step-by-step ap-
First, all indicators are normalized according to the min–max proach for the construction and use of such composite measures in
method within the range [0, 1] to standardize the variables for further practice. Each of the five indicators considered for the SDG-9 index
data aggregation as they have different measurement units. The in- compilation are normalized into the range of [0, 1] using the min–max
dicators MVAsh, MVApc, EMP and MHT are considered to be “positive”, method, where the minimum and maximum values are taken from each
i.e. the country with the best performance is assigned the highest score, indicator sample,
a value of 1, and the country with the worst performance is assigned by
the lowest score, a value of 0. Because reductions in CO2 are desirable, x ict − min x it
c
we reverse the meaning of the indicator and use an inverse normal- Iict = ,
max x it − min x it
ization. The country with the highest level of manufacturing CO2 in- c c (1)
tensity is assigned a value of 0 and the country with the lowest CO2
max x it − x ict
intensity a value of 1. The min–max method is a useful approach to c
Iict = ,
normalize indicators with a small range of values; on the other hand, it max x it − min x it
c c (2)
can distort indicators including extreme values or outliers.
Fig. 1 presents the normalized indicators in 2016 and their dis- where x ict
signifies the value of the i-th indicator for the c-th country at
tribution together with their correlation measures and the distribution time t. Eq. (1) is valid for indicators with higher values representing
of the pairs of indicators with 0.975 tolerance ellipses. The distribution better performance (MVAsh, MVApc, EMP and MHT); Eq. (2) is valid for
of the indicators MVApc and CO2 is highly skewed, which is preserved indicators with lower values representing better performance (CO2).
after normalization. This feature reflects the unequal distribution of After all five indicators are normalized, the SDG-9 index is con-
structed as a geometric mean using equal weights for each of the k
1
indicators and each country c as
The Tier I indicator is conceptually clear, is based on an internationally
1
established methodology, standards are available and data are regularly pro- k k
⎛ ⎞
duced by at least 50 per cent of the countries and of the population in every (SDG − 9)tc = ⎜∏ Iict ⎟ ,
region where the indicator is relevant. The Tier II indicator is conceptually ⎝ i=1 ⎠ (3)
clear, is based on an internationally established methodology, standards are
available but data are not regularly produced by countries. Tier III refers to with values varying within the range [0, 1]. The selection of equal
indicators for which no internationally established methodology or standards weighting makes the index highly transparent, a key feature of well-
are yet available but the methodology/standards for the indicator are being (or designed indices [22]. The logic behind choosing equal weights was
will be) developed or tested. also supported by the positive correlation patterns between normalized

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Table 1
SDG-9 industry-related indicators and data sources.
Indicator Description Source Countries

9.2.1 Manufacturing value added as a proportion of GDP and per capita MVAsh UNIDO and UNSD National Accounts 206
MVApc
9.2.2 Manufacturing employment as a proportion of total employment EMP UNIDO and ILO Employment by sex and economic activity 188
9.3.1 Proportion of small-scale industries in total industry value added SSI.VA UNIDO INDSTAT 57
9.3.2 Proportion of small-scale industries with a loan or line of credit SSI.FIN UNIDO and World Bank Enterprise Surveys 134
9.4.1 CO2 emissions per unit of value added CO2 UNIDO and IEA CO2 emissions from fuel combustion 140
9.b.1 Proportion of medium and high-tech industry value added in total value added MHT UNIDO INDSTAT 151

Table 2
SDG-9 targets and indicators (as of 4 April 2019).
Target Indicators Custodian Tier
agency

9.1 Develop quality, reliable, sustainable and resilient infrastructure, including regional 9.1.1 Proportion of the rural population who live within World Bank II
and transborder infrastructure, to support economic development and human well- 2 km of an all-season road
being, with a focus on affordable and equitable access for all
9.1.2 Passenger and freight volumes, by mode of transport ICAO, ITF-OECD I
9.2 Promote inclusive and sustainable industrialization and, by 2030, significantly raise 9.2.1 Manufacturing value added as a proportion of GDP UNIDO I
industry’s share of employment and gross domestic product, in line with national and per capita
circumstances, and double its share in least developed countries
9.2.2 Manufacturing employment as a proportion of total UNIDO I
employment
9.3 Increase the access of small-scale industrial and other enterprises, in particular in 9.3.1 Percentage share of small-scale industries in total UNIDO II
developing countries, to financial services, including affordable credit, and their industry value added
integration into value chains and markets
9.3.2 Percentage of small-scale industries with a loan or UNIDO II
line of credit World Bank
9.4 By 2030, upgrade infrastructure and retrofit industries to make them sustainable, 9.4.1 CO2 emission per unit of value added UNIDO I
with increased resource-use efficiency and greater adoption of clean and IEA
environmentally sound technologies and industrial processes, with all countries
taking action in accordance with their respective capabilities
9.5 Enhance scientific research, upgrade the technological capabilities of industrial 9.5.1 Research and development expenditure as a UNESCO-UIS I
sectors in all countries, in particular developing countries, including, by 2030, percentage of GDP
encouraging innovation and substantially increasing the number of research and
development workers per 1 million people and public and private research and
development spending
9.5.2 Researchers (in full-time equivalent) per million UNESCO-UIS I
inhabitants
9.a Facilitate sustainable and resilient infrastructure development in developing countries 9.a.1 Total official international support (official OECD I
through enhanced financial, technological and technical support to African countries, development assistance plus other official flows) to
least developed countries, landlocked developing countries and small island infrastructure
developing States
9.b Support domestic technology development, research and innovation in developing 9.b.1 Percentage of medium and high-tech manufacturing UNIDO I
countries, including by ensuring a conducive policy environment for, inter alia, value added in total value added
industrial diversification and value addition to commodities
9.c Significantly increase access to information and communications technology and 9.c.1 Percentage of population covered by a mobile ITU I
strive to provide universal and affordable access to the Internet in least developed network, by technology
countries by 2020

Source: UN Statistics Division.

indicators that should have a smaller impact on the selection of weights emissions intensity. The distribution of normalized CO2 is heavily
[40]. skewed and dominated by high values close to 1.
The robustness of the SDG-9 index can be tested by taking un- Major differences in scores and ranks are usually witnessed when an
certainty factors into consideration and conducting a sensitivity ana- indicator that represents country’s comparative advantage is excluded.
lysis. Different scenarios were tested to identify the composite index’s In other words, if the country performs very well in one dimension only
level of sensitivity to the change in parameters – different weighting or in one indicator only, it is more sensitive to any change in the index’s
schemes, aggregation methods and a successive exclusion of indicators. weighting setting or the exclusion of the particular indicator. Testing
The resulting variation of countries’scores and rankings are depicted in alternative scenarios by excluding indicators showed that the least in-
Figs. 3 and 4. The countries are ordered according to their median and fluential indicator is CO2 emission intensity and the MVA per capita
the original value of the SDG-9 index is marked in red. carries the most weight.
The ranking of countries is very robust for economies in the top and
bottom quintiles of the scale. Although the countries that are listed 4. The SDG-9 index
between those tails reveal a wider interquartile range, the original SDG-
9 index ranking remains very close to the median. More than half of the 4.1. Global analysis of sustainable and inclusive industrial development
economies only shifted by maximum one position from the median based on the SDG-9 index
rank. The scores are positively skewed, which is caused by changes in
the weighting system. If equal weights are abandoned, greater im- The SDG-9 index is calculated for 128 economies for which data are
portance is given to the environmental dimension represented by CO2 available for all indicators to improve the comparability of the

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SDG-9 score varies from 0 to 0.73, however values are skewed towards
lower scores with a median value of 0.26.
In 2016, the top 10 ranked economies were Ireland, Germany, the
Republic of Korea, Switzerland, Japan, Czechia, Taiwan Province of
China, Slovakia, Singapore and Austria. All of them belong to the group
of industrialized economies according to the UNIDO country grouping
system [39].
Fig. 5 reveals some regional patterns towards achieving SDG in-
dustry-related targets. The highest scores are for the most part reached
by economies situated in Central Europe and Eastern Asia. In contrast,
the poorest SDG-9 index performance is observed in LDCs, especially
those located in sub-Saharan Africa.
The comparison of the 2016 SDG-9 index with the ranking and
scores of the year 2010 shows how countries improved their perfor-
mance over time. In terms of scores, the biggest jump upwards was
achieved by Ireland, increasing its overall score by 0.165 and thereby
climbing from the 7th to 1st in the rankings. This is mainly related to
the fact that a number of large manufacturing corporations have re-
located their activities to Ireland in recent years. Due to low corpora-
tion tax rates, sales (production) generated from the use of intellectual
property boosted Irish GDP and MVA [39]. Looking at the rankings,
Viet Nam experienced the biggest increase, jumping 17 positions from
the 85th to the 68th rank. Although Lebanon and Israel dropped sig-
Fig. 1. Correlation analysis of the normalized indicators. nificantly, by 16 and 13 places respectively, their scores changed only

Fig. 2. Biplot displaying normalized indicators used to construct the SDG-9 index.

performance over the years 2000–2016. This chapter focuses on the slightly.
ranking and scores of the SDG-9 index, particularly on the year 2016.
The final ranking and its components are available in Table 3. The
global distribution of SDG-9 scores in 2016 is depicted in Fig. 5. The

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Fig. 3. Sensitivity analysis results for the SDG-9 index rankings.

4.2. Investigation of dimensions and country groupings classified by UNIDO groupings - from industrialized economies to LDCs.
The distribution of the normalized CO2 emissions intensity is also very
The final SGD-9 index is constructed from five indicators covering skewed with high values concentrated in the group of industrialized
different dimensions of ISID. Another step to investigate performance of economies and countries specialized in low-technology manufacturing
countries leads to a further analysis of single components. Fig. 6 shows activities.
how the scores are distributed by country groups taking into account Fig. 7 presents the performance of selected countries by individual
not only the final composite measure (SDG-9), but also separate scores indicators according to the results of the SDG-9 scores and rankings in
for included indicators (MVAsh, MVApc, EMP, CO2 and MHT). 2016. The radar chart is a useful visualization tool to help countries to
Industrialized economies performed best in all dimensions of the develop and improve their national development strategies. The graph
SDG-9 index, including almost all countries achieving the top normal- can reveal dimensions that should be addressed for a countries’ further
ized scores equal to 1. The leading countries in respective dimensions development. Moreover, it can help identify economies with a higher
are Ireland (MVAsh with 31.6%, MVApc with $22,217), Czechia (EMP level of development to serve as role models.
with 27.8%), Namibia (CO2 with 0.02 kg/USD) and Singapore (MHT The left side of Fig. 7 depicts the top five industrialized economies
with 78.1%). The normalized MVApc by country groups indicates the (Ireland, Germany, the Republic of Korea, Switzerland and Japan)
same pattern as already recognized by the correlation analysis. The showing their scores in various dimensions. All countries perform very
distribution is heavily positively skewed, suggesting unequal allocation well in all dimensions, their scores varying between 0.5 and 1, and
of manufacturing production capacities globally. The median scores are therefore they represent also the top five countries of the overall SDG-9
successively decreasing with the level of industrial development as ranking. The right part of the graph shows the top five emerging

Fig. 4. Sensitivity analysis results for the SDG-9 index scores.

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Table 3 Table 3 (continued)


SDG-9 index and ranking 2016. Figures are displayed in following units: MVAsh
(%), MVApc (USD), EMP (%), CO2 (kg/USD), MHT (%). Rank Country SDG-9 MVAsh MVApc EMP CO2 MHT
score
Rank Country SDG-9 MVAsh MVApc EMP CO2 MHT
score 71 India 0.252 16.8 311 12.0 1.3 38.8
72 Mauritius 0.252 12.5 1230 15.1 0.2 9.8
1 Ireland 0.735 31.6 22,217 11.7 0.0 54.4 73 Bosnia & 0.250 12.0 644 15.9 0.8 18.4
2 Germany 0.651 21.1 9,730 19.2 0.1 61.5 Herzegovina
3 Rep. of Korea 0.643 28.4 7,304 17.1 0.2 63.7 74 Suriname 0.241 17.7 1433 6.4 0.0 11.6
4 Switzerland 0.641 19.0 14,521 12.8 0.0 64.6 75 Peru 0.232 13.1 798 9.3 0.3 15.9
5 Japan 0.622 20.9 9,863 16.8 0.2 56.2 76 Sri Lanka 0.226 15.4 588 18.8 0.1 7.6
6 Czechia 0.612 23.6 5,136 27.8 0.2 52.4 77 Paraguay 0.220 11.1 435 11.2 0.1 21.9
7 Taiwan, Prov. of 0.607 22.5 4,555 24.5 0.4 68.9 78 Oman 0.220 9.3 1545 5.1 3.5 21.9
China 79 Ecuador 0.214 12.3 638 10.8 0.3 12.1
8 Slovakia 0.584 24.1 4,637 24.5 0.3 51.4 80 Ukraine 0.212 10.6 295 12.3 2.8 30.4
9 Singapore 0.583 18.0 9,415 11.0 0.2 78.1 81 Egypt 0.210 14.9 401 11.5 0.8 14.0
10 Austria 0.553 17.7 8,500 15.9 0.1 45.7 82 Kazakhstan 0.206 10.2 1084 6.5 2.2 14.2
11 Slovenia 0.522 18.7 4,538 25.3 0.2 37.5 83 Brunei Darussalam 0.201 15.0 4705 3.7 0.2 3.3
12 Hungary 0.502 18.5 2,789 21.7 0.2 59.7 84 Kuwait 0.200 4.9 1717 4.4 2.5 29.3
13 China 0.494 31.4 2,123 22.9 0.9 41.5 85 Pakistan 0.196 12.9 149 15.3 1.5 24.6
14 Italy 0.489 14.7 5,149 18.2 0.1 42.9 86 Honduras 0.193 16.2 346 15.0 0.3 7.2
15 Denmark 0.487 12.4 7,550 11.8 0.1 54.2 87 Bangladesh 0.190 19.8 203 14.4 0.5 9.8
16 Finland 0.483 14.9 6,833 13.4 0.2 41.4 88 Cyprus 0.189 4.2 875 7.2 0.6 25.4
17 Sweden 0.478 13.3 7,581 10.3 0.1 53.0 89 Nigeria 0.186 9.2 226 7.8 0.2 33.4
18 Belgium 0.476 13.9 6,286 12.4 0.3 49.5 90 Myanmar 0.181 22.9 269 10.7 0.1 6.6
19 Malaysia 0.461 23.1 2,549 16.9 0.4 44.1 91 Rep. of Moldova 0.175 11.7 212 10.0 0.9 16.4
20 Romania 0.442 21.0 2,108 18.9 0.3 42.5 92 Bolivia 0.169 11.0 271 9.8 0.7 11.7
21 USA 0.436 11.4 5,990 10.8 0.2 47.8 93 Jamaica 0.169 7.7 370 6.6 0.4 18.8
22 Poland 0.435 17.5 2,616 20.3 0.3 35.4 94 Lebanon 0.169 5.1 361 9.7 0.5 20.0
23 Thailand 0.429 27.5 1,641 16.7 0.4 40.7 95 Georgia 0.166 11.4 441 5.5 0.7 11.5
24 Netherlands 0.422 10.7 5,593 10.4 0.2 48.9 96 Cte d’Ivoire 0.161 14.0 219 5.8 0.3 15.0
25 France 0.419 10.4 4,496 12.3 0.1 50.1 97 Namibia 0.161 9.5 575 6.6 0.0 7.4
26 Spain 0.411 12.8 4,035 12.5 0.1 39.9 98 Cameroon 0.158 14.1 211 10.2 0.1 7.6
27 Belarus 0.406 22.6 1,406 18.1 0.3 40.6 99 Azerbaijan 0.148 5.7 333 5.1 0.8 20.3
28 Lithuania 0.404 18.4 2,892 15.4 0.1 27.9 100 Armenia 0.143 9.8 411 8.3 0.3 4.5
29 Israel 0.402 11.6 4,092 11.5 0.1 42.4 101 Senegal 0.142 10.3 113 6.1 1.0 21.7
30 Turkey 0.397 16.2 2,289 18.1 0.3 31.5 102 Panama 0.138 5.3 578 7.3 0.9 6.2
31 Estonia 0.393 14.5 2,629 18.8 0.1 27.8 103 Botswana 0.131 6.2 467 6.1 0.1 5.8
32 Qatar 0.386 9.2 6,019 7.0 0.9 54.2 104 Albania 0.131 5.8 269 9.7 0.7 6.7
33 Mexico 0.373 15.3 1,505 16.4 0.3 41.6 105 Montenegro 0.129 4.1 307 5.6 0.8 14.9
34 Portugal 0.370 12.5 2,781 16.9 0.2 25.6 106 Zambia 0.127 8.1 131 4.1 0.2 21.1
35 Canada 0.363 10.0 5,043 9.4 0.3 30.6 107 Kenya 0.116 10.1 115 3.5 0.6 15.0
36 Bahrain 0.359 14.9 3,328 12.1 0.5 22.2 108 Zimbabwe 0.114 8.6 78 3.9 0.8 21.8
37 Trinidad and Tobago 0.352 16.2 2,622 7.8 1.2 39.6 109 Mongolia 0.111 5.6 217 7.5 1.5 5.6
38 Croatia 0.352 12.4 1,800 17.1 0.3 30.8 110 Kyrgyzstan 0.111 13.7 145 7.6 0.9 3.0
39 Norway 0.351 6.6 5,927 8.3 0.2 39.8 111 Syrian Arab Republic 0.108 3.3 54 15.7 3.6 21.5
40 United Kingdom 0.348 8.1 3,405 9.5 0.2 45.4 112 China, Hong Kong 0.102 1.4 523 3.0 1.9 37.4
41 Iceland 0.339 12.5 6,129 10.1 0.2 13.1 SAR
42 Russian Federation 0.332 13.6 1542 14.4 0.8 30.3 113 Algeria 0.099 4.3 209 11.8 0.8 2.7
43 Indonesia 0.331 21.4 850 13.5 0.4 35.1 114 Haiti 0.098 10.4 77 6.2 0.7 5.3
44 Bulgaria 0.326 13.2 1051 19.5 0.5 29.7 115 Tajikistan 0.090 12.7 117 5.2 0.1 2.2
45 Saudi Arabia 0.325 11.9 2546 7.8 1.4 37.9 116 Congo 0.090 3.9 111 17.4 0.1 2.4
46 Iran 0.318 12.2 826 16.9 1.4 45.2 117 Mozambique 0.089 8.8 46 4.0 0.2 10.9
47 Argentina 0.316 14.4 1475 12.7 0.5 26.0 118 Gabon 0.089 4.5 397 2.3 1.5 5.4
48 Venezuela 0.316 13.4 1403 11.1 0.6 34.3 119 Ethiopia 0.079 5.5 25 5.5 1.4 16.1
49 Tunisia 0.311 15.7 658 18.7 0.7 33.7 120 Nepal 0.076 5.3 37 6.2 2.6 8.4
50 New Zealand 0.310 9.9 3681 9.9 0.4 18.5 121 Angola 0.074 7.1 255 1.6 0.3 3.4
51 Malta 0.310 7.7 2085 12.5 0.0 32.5 122 Tanzania 0.074 6.7 56 3.0 0.4 6.8
52 Latvia 0.302 11.3 1659 13.8 0.2 21.5 123 Ghana 0.067 5.3 90 13.9 0.7 0.8
53 Brazil 0.300 11.2 1214 11.4 0.3 35.4 124 Eritrea 0.066 5.8 34 5.0 0.1 4.3
54 Philippines 0.297 22.4 617 8.3 0.2 44.7 125 Yemen 0.060 6.5 34 6.4 1.1 2.1
55 United Arab 0.296 8.5 3487 8.1 2.1 25.5 126 Niger 0.055 6.3 25 7.2 0.4 1.8
Emirates 128 Cambodia 0.000 16.4 177 16.3 0.2 0.3
56 Australia 0.293 6.2 3919 8.2 0.3 27.0 128 Iraq 0.000 0.9 50 8.2 4.7 8.9
57 Serbia 0.293 15.4 721 16.5 0.7 26.4
58 Macedonia 0.287 13.7 720 19.0 0.6 23.0 Source: Authors’ calculations based on [42–44,9,45].
59 El Salvador 0.285 19.2 732 15.2 0.2 19.1
60 Uruguay 0.277 12.3 1722 11.3 0.1 15.3
61 Costa Rica 0.275 13.1 1268 10.2 0.2 20.8
industrial economies – China (13th rank), Romania (20th), Poland
62 Guatemala 0.270 18.2 565 13.5 0.2 22.4 (22nd), Thailand (23rd) and Turkey (30th). This reveals significantly
63 South Africa 0.265 12.5 936 10.7 0.9 24.4 lower scores for MVA per capita, close to zero. The untapped potential
64 Greece 0.264 8.3 1824 9.5 0.3 20.9 in emerging industrial economies is visible with regards to the MHT
65 Chile 0.262 9.9 1479 11.0 0.3 17.8
indicator. Promoting medium–high and high-tech manufacturing ac-
66 Jordan 0.262 15.8 516 13.0 0.6 26.3
67 Luxembourg 0.258 5.2 5741 4.8 0.3 22.0 tivities might help these countries to increase their competitive ad-
68 Viet Nam 0.258 16.2 281 16.7 2.3 37.8 vantage and thus raise MVA per capita.
69 Colombia 0.257 11.2 843 11.8 0.4 22.8
70 Morocco 0.253 15.5 526 10.3 0.3 27.8

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Fig. 5. Global distribution of SDG-9 index scores in 2016.

cases.
All figures show apparent clusters for country groupings and rela-
tion between corresponding composite measures. Fig. 8 illustrates a
relation of the SDG-9 index to other indices developed by UNIDO, i.e.
the CO2-adjusted CIP index and the GIP index. The CO2-adjusted CIP
index was chosen rather than the widely-used CIP index due to its ex-
tension for the environmental effects of manufacturing production.
That makes its relationship to the SDG-9 index stronger than to the CIP
index, which is solely established on economic indicators.
Industrialized economies dominate the top positions of both the
SDG-9 and CO2-adjusted CIP rankings. Other countries are gathered
around the regression line that indicates a proportional behavior be-
tween both indicators: an increase in the SDG-9 scores accompanies a
raise in the scores of the CO2-adjusted CIP index. In both rankings, the
top five ranked countries are almost the same – with the exception of
the Republic of Korea, which is replaced by Italy in the case of the CO2-
adjusted CIP index.
Fig. 6. Distribution of SDG-9 scores by indicators and country groupings. The comparison with the GIP index shows more scattered results.
However, the relation between both indices reveals a similar pattern as
5. Comparison of the SDG-9 index to other indices for the CO2-adjusted CIP index. It is evident that the group of emerging
industrial economies overlaps with lower ranked industrialized coun-
For further analysis, the SDG-9 index is compared to other perfor- tries.
mance indicators on ISID mentioned in Section 2. A focus of this Fig. 9 compares the SDG-9 index to indices with a similar con-
comparative study is given to the top performing economies from each ceptual framework to capture inclusive and sustainable (industrial)
country group – five industrialized countries (Ireland, Germany, the development, i.e. the IDI and the IST index. A clear pattern of a positive
Republic of Korea, Switzerland and Japan), five emerging industrial correlation is observed between the SDG-9 index and both indices. In
economies (China, Romania, Poland, Thailand and Turkey), three other general, the higher the IDI or IST score, the higher the score of the SDG-
developing economies (Philippines, El Salvador and Guatemala) and 9 index. These two indices are of special interest with respect to the
three LDCs (Bangladesh, Myanmar and Senegal). The local regression SDG-9 index since they incorporate similar indicators.
method is applied to explore the relation between indices since the The IDI index contains indicators such as GDP per capita, employ-
structure seems to be highly complex and non-linear in the selected ment and carbon intensity of GDP. However its focus is on the impact of

Fig. 7. SDG-9 scores for single indicators in the top 5 ranked industrialized countries (left) and top 5 ranked emerging industrial economies (right).

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P. Kynčlová, et al. Applied Energy 265 (2020) 114755

Fig. 8. Comparison of the SDG-9 index with the CO2-adjusted CIP index (left) and the GIP index (right).

the whole economy. It should be noted that data for the IDI are not 6. Concluding remarks
available for many LDCs, which do therefore not appear in the com-
parison. Fig. 9 reveals the inverse U-shaped relation between the IDI The 2030 Agenda for Sustainable Development recognizes the im-
and the SDG-9 index with visible clusters of countries according to their portance of encompassing all dimensions of sustainable development to
stage of industrial development. The curve suggests that there are sig- ensure sustainable social and economic progress worldwide. The uni-
nificant differences within the group of industrialized economies. Al- versal adoption of the 2030 Agenda makes it the key guidelines for
though they perform very well in terms of economic growth and en- achieving sustainable future for all. Through the localization of the
vironmental performance, they face a critical challenge represented by Sustainable Development Goals, governments should implement the
increasing economic and social inequalities. Goals and targets into their national development strategies and create
The closest relationship to the SDG-9 index can be observed with the a plan of action. The paper introduces a new index to measure the
IST index. The IST index is constructed using 23 indicators along 8 progress of countries towards meeting the industry-related targets of
dimensions including manufacturing. Indicators selected for the SDG-9 Sustainable Development Goal 9 and thus achieving inclusive and
index are all included in the framework for the IST index. The only sustainable industrial development. The SDG-9 index builds on a series
distinction comes with carbon dioxide intensity, which is calculated for of contributions on other composite indicators tracking paths of coun-
manufacturing industries only in the case of the SDG-9 index. Although tries on their way to sustainable development. Adding to this literature,
the data points are widely scattered, they follow the regression line as the SDG-9 index is directly linked to global goals of the 2030 Agenda
countries industrialize. and thus the final results can help countries assess their own positioning
towards inclusive and sustainable industrial development with respect
to their national development plans. Furthermore, policy makers are
equipped with a tool examining countries’ performance relative to

Fig. 9. Comparison of the SDG-9 index with the IDI index (left) and the IST index (right).

10
P. Kynčlová, et al. Applied Energy 265 (2020) 114755

other globally. interests or personal relationships that could have appeared to influ-
The paper proposes a straightforward tool to help countries track ence the work reported in this paper.
performance in different dimensions of sustainable development and to
enable policy makers and researchers to develop strategies towards Disclaimer
achieving inclusive and sustainable industrial development. For this
reason, the indicators for the construction of the SDG-9 index are se- The views expressed here are those of the authors and do not reflect
lected based on the global indicator framework for monitoring the views of the United Nations Industrial Development Organization.
Sustainable Development Goals. Mainstreaming inclusive and sustain-
able industrial development in national policies expects governments to CRediT authorship contribution statement
gain a solid understanding of the relationships, synergies and trade-offs
of industry-specific strategies and policy instruments leading to eco- Petra Kynčlová: Conceptualization, Methodology, Software,
nomic growth, social inclusiveness and environmental sustainability. Visualization, Writing - original draft, Validation. Shyam Upadhyaya:
One important contribution of the paper is the verification of the Supervision. Thomas Nice: Investigation, Data curation, Writing - re-
existence of different stages of industrial development. The SDG-9 index view & editing.
shows that industrialized economies dominate the overall ranking as
they perform best in all dimensions captured in the composite measure. Acknowledgements
Evidence indicates that developing countries at an early stage of in-
dustrialization have more opportunities to achieve inclusive industrial The authors would like to thank participants of the UNIDO and
development experiencing fast economic growth with limited en- PAGE workshop “Green Industry and ISID Measurement” held in
vironmental damage. Labour-intensive industries, such as food and Vienna on 23 May 2018 for their valuable inputs. The authors are
beverages, chemicals, non-metallic minerals, textiles and wearing ap- grateful to Nicola Cantore, Niki Rodousakis, Michael Windisch and
parel, are most likely to generate the most significant employment Xiaole Zheng for their valuable feedback to improve the manuscript.
opportunities because low wages can provide developing countries with The authors would also like to thank the anonymous referees and the
a comparative advantage in these industries. editors for their review and helpful comments and suggestions.
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