Policies that Characterize Dynamic include Commodity Sectors a Eliminating price controls

include:
a Eliminating price controls
and state monopolies.
a
Promoting researchand Developing transport and
Takamasa Akiyama
extension.
a
communications infrastructure.
This paper - a product of the Commodity Policy and Analysis Unit, International Economics Department - is part of a larger effort in the department to analyze commodity policies in developing countries. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Grace ilogon, room N5-032, telephone 202-473-3732, fax 202-522-3564, Internet address gilogon@. May 1996. (40 pages)
10 10 16 19 22
m
Policies Promoting Viable Commodity Sectors
24
-Eliminating Market Controls and Dominant State-Owned Enterprises in the Market -Enticing Foreign Capital and Technology Transfers -Promoting Research and Extension -Developing Good Infrastructure in Transport and Communication -Establishment of Legal System for the use of Innovative Financial Instruments and System 35 24 29 31 34
by
Nanae Yabuki and Takamasa Akiyama
I
TABLE OF CONTENTS
Introduction I Basis for Commodity Pessimism
1 3
II
Salient Features of successful Commodity Exporting Countries -Export Structure of Successful Commodity-Dependent Countries -Investment in Commodity Sector Development -Foreign Capital and Technology Transfers -Enabling Environment to Increase Investment
a
Enticing foreign capital
and technology transfers. - Establishinga legal system that encouragesthe use of innovative financial instruments.
The World Bank International EconomicsDepartment
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POLICY
RESEARCH
WORKING
PAPER
1600
Is Commodity-Dependence
PessimismJustified?
Critical Factors and Government Policies that Characterize Dynamic Commodity Sectors
Produced by the Policy Research Dissemination Center
Is Commodity-Dependence Pessimism Justified?
Critical Factors and Government Policies that Characterize Dynamic Commodity Sectors
Nanae Yabuki
Commoditydependence
does not necessarily lead to
low income and export
growth. Government policies
that encouragedynamicand viable commoditysectors
The Policy Research Working Paper Series disseminates the findings of work in progressto encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be used and cited accordingly. The findings, interpretations, and conclusions are the authors' own and should not be attributed to the World Bank, its Executive Board of Directors, or any of its member countries.
Commodity Policyand Analysis Unit
May 1996
a
PoLIcy P
RESEARCH WORKING
PAPER
1600Βιβλιοθήκη Summary findings
Economists often associate a country's dependence on primary commodities for exports, income, and employment with underdevelopment and low income. Yabuki and Akiyama 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 'ead 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, and Colombia's cutflower industry - Yabuki and Akiyama identify government policies that encourage viable commodity sectors. These include: * Eliminating price controls and state monopolies. * Promoting research and extension. * Developing sound infrastructure in transport and communications. * Enticing foreign capital and technology transfers. - Establishing a legal system that encourages the use of innovative financial instruments, especially risk management instruments and a sound warehouse receipt system.
IV
Conclusion
40 42 43
Appendix Reference
I
INTRODUCTION
Dependence of a country on primary commodities in terms of exports, income and employment is often associated with underdevelopment and low income. Global Economic Prospects and the Developing Countries of 1996 (GEP96) found that many commodity-dependent countries have lagged in the global integration which, in turn, is closely related to low income growth. Pessimism surrounding commodity dependence has existed since the 1950s. This pessimism gained renewed prominence in recent years when commodity prices experienced an historically bad price collapse in the 1980s and the World Bank Non-fuel Commodity Price Index declined by 25 percent in nominal and 50 percent in real terms (nominal prices deflated by the Bank's unit export value index of manufactures exported by the G-5 countries (MUV)) between 1980 and 1993.