Third world countries present both problems and challenges when it comes to a green economic growth. How to tackle this problem?
An important question always asked in the context of climate change is how to support developing countries’ transition to a green economy? Green technologies are new and expensive, and often developing countries do not have the means to support them.
Third world countries are both those with the most potential for a green industrialisation and those hit more by climate change. In fact, this year’s COP27 climate meeting was focused solely on the effects of climate change on developing countries.
Third world countries pleaded for a “loss and damage” fund to be paid by richer nations. In the end, they managed to scrape something for themselves, but it still might not be enough.
A systematic set of investments needs to be put into place. Already many organizations go to African and Asian countries to invest in biologic and green crops. This also helps developing countries to grow in their economy, widening the pie for everyone else on the planet.
Such investments also offer increasingly higher returns. A report from the World Trade Forum showed that a $20 billion investment by the Green Climate Fund yielded a return four times bigger. The Green Climate Fund develops sustainable activities in Third world countries, again helping them industrialize without harmful technologies.
How trade can help developing countries
According to a WTO report, the answer simply is: trade. With more trade and less restrictions, developing countries could start investing immediately in green technologies, especially relying on economies of scale.
Morocco, for example, with its huge availability of solar power, has become a leading African nation in the sector. The price of solar has dropped 90% in the last 10 years, but it is not the only energy to do so.
Wind power’s price has also decreased by 70% since 2010, and indeed the only green energy to have increased in price is nuclear. That’s however due to a strong focus on safety measures which now make nuclear the safest energy source available.
Eliminating or reducing tariffs on green technologies would have both an immediate and long-term impact on carbon emissions. Immediately, emissions would be reduced for obvious reasons, while long-term it would make green technologies more available for developing countries.
Unfortunately, however, the WTO also recognized that trade restrictions are not decreasing. When the war in Ukraine broke out, such restrictions reached a new high, and are hardly coming back now. "Out of the 78 export restrictive measures on food, feed, and fertilizers introduced since the start of the war in late February, 57 are still in place, covering roughly $56.6 billion of trade,” said WTO Director General.
Our hope is that trade restrictions will fade away as the war progresses and eventually comes to an end. In the meanwhile, support for sustainable technologies in developing countries should absolutely not stop.
