Commodity-Dependent Developing Countries Need to Boost Efforts to Diversify Their Economies


Human Wrongs Watch

Without policy change, these countries risk falling short of achieving sustainable development by 2030, UN report warns

Geneva/Rome – Without a renewed commitment to policy change, commodity-dependent developing countries (CDDCs) are by 2030 set to lag behind countries with more diverse economies in their social and economic achievements, UNCTAD and the Food and Agriculture Organization of the United Nations (FAO) said in a report issued on 11 December 2017.

Photo: ©FAO/Sue Price

Developing countries that are commodities-dependent are set to lag behind countries with more diverse economies, unless there is a renewed commitment to policy change. Photo from FAO.


The Commodities and Development Report 2017 argues this is a likely scenario given that global food and non-food commodity prices – with the exception of oil – are expected to remain at their 2010 levels.

They may even increase slightly in the years leading to 2030 – the target date for the achievement of the Sustainable Development Goals (SDGs) agreed by the international community in 2015. However, the report notes that these global price patterns may diverge once broken down to the regional and national levels.

The 2003-2011 commodity price boom drove up export revenues and, generally, economic growth rates for many CDDCs, but this trend has either slowed down or has been reversed since global commodity prices stabilized at a lower level, the report notes.

This in turn has brought to light the importance of investing in human capital and social protection as well as of redistributive policies, considering that strong overall economic growth alone does not necessarily translate into poverty reduction and food security achievements.

The report stresses the need for CDDCs to pursue structural transformation to improve their social and economic prospects, reduce poverty, realize food security and achieve the SDGs at large.

To support its policy recommendations, the report reviews policies pursued by several countries and their respective socio-economic impacts.

The case studies cover such commodities in producing countries as soybeans in Argentina and Brazil, rice in Bangladesh, diamonds in Botswana and Sierra Leone, cotton in Burkina Faso, coffee and bananas in Costa Rica, cocoa in Ghana, nickel in Indonesia, sorghum in Mali, oil in Nigeria, and copper in Zambia.

According to the report, policies that can promote inclusive growth over the next 15 years include economic diversification, expanding the linkages between the commodity sector and the national economy, adopting countercyclical expenditure policies which build commodity revenue buffers during price upswings to use them during downswings, adding value to raw commodities, and investing in social protection, health and education.

CDDCs will require more policy space in order to tailor the right policy mix to fit their economic conditions and circumstances and drive their sustainable economic development in an increasingly globalized world.

Ultimately, structural transformation should result in the successful implementation of the 2030 Agenda for Sustainable Development, of which the SDGs are the core, the report concludes. (SOURCE: FAO).

2017 Human Wrongs Watch

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