Is commodity-dependence pessimism justified? Critical factors and government policies that characterize dynamic commodity sectors

Nanae Yabuki and Takamasa Akiyama

No 1600, Policy Research Working Paper Series from The World Bank

Abstract: Economists often associate a country's dependence on primary commodities, for exports, income, and employment with underdevelopment and low income. The authors explore this commodity pessimism theoretically and empirically and suggest that it may be ill-founded. If it is, it could have adverse ramifications for many commodity-dependent developing countries. They examine successful commodity-exporting countries and show that commodity dependence does not necessarily lead to low income and export growth. Successful commodity-exporting countries achieve dynamic and viable commodity sectors by implementing appropriate policies that encourage private sector initiative and investment. Drawing on successful cases - including Uganda's coffee sector, Ghana's gold mines, Colombia's cut-flower industry - the authors identify government policies that encourage viable commodity sectors. These include: 1) eliminating price controls and state monopolies; 2) promoting research and extension; 3) developing sound infrastructure in transport and communications; 4) enticing foreign capital and technology transfers; and 5) establishing a legal system that encourages the use of innovative financial instruments, especially risk management instruments and a sound warehouse receipt system.

Keywords: Environmental Economics&Policies; Economic Theory&Research; Labor Policies; Commodities; International Terrorism&Counterterrorism; Economic Theory&Research; Environmental Economics&Policies; Crops&Crop Management Systems; Commodities; International Terrorism&Counterterrorism (search for similar items in EconPapers)
Date: 1996-05-31
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... d/PDF/multi0page.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:1600

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().