Deep dependency on commodities persists in developing countries; adding value to resources can help shift this trend
In recent years, the dependence of many developing countries on commodity exports has remained a significant issue, particularly for least developed countries (LDCs), landlocked developing countries (LLDCs), and small island developing states (SIDS). According to the latest edition of The State of Commodity Dependence report by UNCTAD, two thirds of developing countries, or 95 out of 143, remained commodity dependent during 2021 and 2023.
The current trends show that commodity dependence remains very high among these countries, with over 80% of LDCs and LLDCs and about 60% of SIDS relying on commodities for more than 60% of their export earnings. This dependence largely revolves around energy, mining, and agricultural products.
Key trends include a persistent high reliance on raw commodity exports. Most African nations and many countries in Central Asia and South America remain heavily reliant on exporting unprocessed commodities such as hydrocarbons, minerals, and agricultural goods. Commodity exports account for 32.7% of international trade in value terms between 2021 and 2023, a decrease from 35.5% from a decade earlier. However, the value of commodity exports has grown slower (15.5%) compared to overall merchandise trade (25.6%) from 2012–2014 to 2021–2023 intervals.
Energy products still dominate global commodity trade, making up 44.5% of the total value during 2021-2023, but this share is smaller than a decade before at 52.1%. In Africa, the decrease in energy products from Nigeria, Angola, and Algeria was the primary reason for the continent's decline in commodity exports, with the value of Africa's commodity exports decreasing by over US$25 billion from a decade before.
The key challenges faced by these countries include economic vulnerability and instability due to heavy commodity dependence, limited economic diversification and value addition, geographical and infrastructural constraints, and household and macroeconomic impacts. Addressing these challenges involves adding value through industrialization and processing, improving infrastructure and cross-border trade facilitation, investing in broadband and technology access, and targeted international support and concessional financing for infrastructure and entrepreneurship.
Agricultural commodity exports grew by 34% to reach US$2.3 trillion, with most of the growth coming from food items. Asia and Oceania maintained their position as the world's largest source of commodity exports, comprising 37.1% of the global total. Despite some slow shifts, commodity dependence remains entrenched for LDCs, LLDCs, and SIDS, posing significant economic and social risks that require urgent, coordinated efforts in value addition, infrastructure, and trade facilitation to build more diversified and resilient economies.
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