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          Commodity Dependency (English)
          Article by Oscar Farfan, 2005, 38 pages
          Categories: Commodities, Trade and Poverty, VI Members Research

          Prepared for the Investment Climate Unit International Finance Corporation The World Bank Group This paper uses the Global Value Chain (GVC) framework to discuss commodity dependency and options for economic upgrading in small developing countries. GVC analysis differs from comparable approaches in that it looks at the dynamics of firms/countries within global production networks and focuses on productive “systems” as opposed to sectors or industries in isolation. Examining global commodity chains through the GVC lenses leads to the conclusion that inserting small developing countries into global markets through commodity exports is not sufficient to sustain real income growth, and may even prove detrimental to their long-term development prospects. Only by virtue of upgrading export industries – which entails moving towards differentiated products with a higher content of technology, skills and innovation – will developing countries be in a position to seize the opportunities brought about by globalization.