A country is dependent on the export of commodities (or “commodity-dependent”) when its merchandise exports are heavily concentrated on primary commodities. The source of commodity dependence can be linked to a country’s persistent or structural conditions, such as its resource endowment and factor composition, institutional framework, geographic situation, history among other factors. UNCTAD member States are considered to be commodity dependent if more than 60 per cent of their merchandise export value comes from commodities. It is important to monitor and analyse the evolution of commodity dependence, as this dependence has been found to have negative implications, in different ways, for a country’s welfare and development. Commodity-dependent countries (CDCs), and in particular commodity-dependent developing countries (CDDCs), are vulnerable to negative shocks that affect the quantities and/or the prices of the commodities exported. Commodity dependence can negatively impact CDCs, and in particular CDDCs, because they are exposed to the sharp reduction or even reversal of capital inflows (a phenomenon often called a “sudden stop”).
[2]