Export Diversification in Low-Income Countries: An International Challenge after Doha

Abstract

This paper discusses major policy issues related to commodity dependence and export diversification in low-income countries. Contrary to some widely-held view, it argues that natural resources are not necessarily a curse - that they do not condemn low-income countries to underdevelopment but can provide rather a basis for sustained export-led growth. Natural resource-based sectors have potential for export diversification. The OECD mirror trade data suggest that many different routes to diversification exist, including resource-based manufacturing and processing of primary products. However, these opportunities are not being exploited in many low-income countries. This is because export diversification is typically a slow process, and this process needs to be sustained by an appropriate and coherent strategy, characterised by a combination of vision, co-ordination and management of conflicting interests.

Moreover, the analysis of trade support services in two African countries points to a mismatch between private sector needs and the services available to them as well as to a limited institutional development of the trade and investment support network. Though important to Africa, lessons for trade capacity building are also relevant for other lowincome countries too.

Keywords: Export diversification, trade capacity building, Doha development Agenda