Conclusion and policy recommendations

Most developing countries are commodity dependent and their movements into and out of commodity dependence are not random. Commodity dependent developing countries tend to remain dependent for a long time. They appear to be trapped. Indeed, historical data and the specific country examples in chapter 2 show that, once a country is commodity dependent, the likelihood of becoming non-dependent is very low. This is a serious problem as commodity dependence is associated with many socioeconomic challenges, as discussed in chapter 1 of this report. In this context, central to the report is the question of whether innovation and the adoption of more sophisticated technologies could help commodity dependent developing countries to move out of the commodity dependence trap. This would imply that commodity dependent developing countries use innovation and technology to transform their economies, by expanding production and exports beyond the commodity sector. Indeed, commodity dependent developing countries need to go through a process of technology-enabled structural transformation whereby new sectors such as manufacturing and high-value services become more important, making commodities less central to the economy. Why this process needs to take place, if commodity dependent developing countries are to become less dependent on the commodity sector, is shown in chapter 3.

Sustainable Development Goals:

No Poverty

Decent Work and Economic Growth

Industry, Innovation and Infrastructure