RESEARCH AND ANALYSIS

Commodity Development Strategies In the Integrated Framework

Raymond Saner Director of the Geneva-based Centre for Socio-Economic Development and Diplomacy Dialogue (CSEND),
Lichia Yiu Trade Policy Governance Programme (TPGP) at CSEND with Alka Bhatia, for UNDP

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The Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries (or IF) programme focuses on trade capacity development with sustainable development and poverty reduction as key objectives. It therefore follows that prioritization of commodity development strategies should feature strongly in the IF programme. Even more so, the Enhanced Integrated Framework should prioritize commodity development strategies that promote, upgrade, diversify and add value to help the countries move up the value chain in the sectors associated with commodity production.

Primary commodities, including agricultural and mineral commodities, are the major source of income and employment for a number of developing countries and LDCs. Development of this sector offers hope for reducing poverty especially amongst marginalized groups like small farm producers and women. For a large number of commodity-dependent countries, the journey out of poverty is linked to the development of their commodity sector and to their successful transition up the production ladder.

In order to address this problem, a UNDP-supported study was conducted to review the existing Diagnostic Trade Integration Studies (DTISs) available as of October 2008 that were carried out under the IF. The objective was to assess whether and to what extent concrete recommendations and actions which can support comprehensive strategies relating to commodity production are provided. The DTIS is a detailed country study of trade needs and priorities, which constitutes the essential first step for participation in the IF.

DTISs were not designed to provide a commodity development strategy as such, but they do perform a useful function by looking at trade capacity development issues including the macroeconomic framework and business/private sector support. In the LDC context, given the extent of commodity dependence, it follows that the DTIS should inevitably consider commodity development strategies.

Some of the DTISs contain useful pointers for a more focused strategy for commodities with considerable potential. But overall, the UNDP study found that the DTISs had the following shortcomings: insufficient attention to 1) physical infrastructure, 2) supply side issues, 3) gender participation, 4) value chain issues, 5) standards, 6) skills and 7) inadequate provision for monitoring the implementation of the DTISs.

The findings of the report call for policy makers, institutional actors and enterprises to develop an integrated commodity development strategy that will move primary commodity producers up the value chain and help reverse the present trend of deindustrialisation in LDCs. Governments and the international community need to provide much needed physical and institutional infrastructure and provide ongoing support for an enabling regulatory environment that encourages investments.

The study points out the significant gaps between different elements in the commodity value chains. It calls for identification of viable policy solutions and the correct sequencing of required interventions for value addition of commodity-related outputs in LDCs.

 

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