Abstract
The green transformation is reshaping global manufacturing and poses a dual challenge for developing countries: they must meet rising environmental standards while continuing to advance industrialization. This policy brief explores how the shift to a low-carbon economy alters the rules of global competitiveness and introduces new sector-specific pressures across energy-, resource-, labour- and technology-intensive industries. While these pressures can marginalize firms and production activities in developing economies from global manufacturing value chains, they also open green windows of opportunity, enable new entry into value chains, create incentives for upgrading and foster pathways for economic leapfrogging. The brief identifies three cross-cutting levers for structural change in manufacturing sectors in developing and middle-income economies, including: leveraging natural endowments, exploiting green latecomer advantages and harnessing digital-green synergies. It sets out actionable policy directions to transform green disruption into sustainable industrial development. The message is clear: green industrialization is not automatic – it is a strategic choice. Timely and targeted interventions will determine whether the green shift widens or narrows existing development gaps.
Key Messages
1. The green transformation redefines industrial com petitiveness. For devel oping countries, it brings opportunities for upgrad ing but can also margin alize firms and activities from global manufacturing value chains.
2. Greening pressures and policy needs vary across industrial settings. Ener gy- and resource-, labour- and technology-intensive industries face distinct challenges and require co ordinated, sector-specific green industrial policies.
3. Green windows of opportuni ty can be seized if countries act strategically. Leveraging natural endowments, exploit ing latecomer advantages and harnessing digital–green synergies can support sus tainable upgrading and long term competitiveness.