Under what conditions can technological change trigger structural change in developing countries and lead to long-term, socially inclusive and environmentally sustainable industrial development? That is the central question addressed in this Industrial Development Report 2016. The Lima Declaration, adopted by the Member States of the United Nations Industrial Development Organization in December 2013, set the foundation for a new vision of inclusive and sustainable industrial development (ISID). The ISID concept is part of the new Sustainable Development Goal 9 to build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.

ISID has three elements, which are the framework for this report. The first is long-term, sustained industrialization as a driver for economic development. The second is socially inclusive industrial development and society, offering equal opportunities and an equitable distribution of benefits. And the third is environmental sustainability, decoupling the prosperity generated by industrial activities from excessive natural resource use and negative environmental impact. This three dimensional structure feeds through to the policy recommendations for dealing with the many trade-offs that countries face in sustaining economic growth, promoting social inclusiveness and moving towards greener economic transformations.