Export Diversification in Low-Income Countries

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.

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