Commodity Dependence and Human Development
Inclusive growth and structural transformation as strategies for poverty reduction in Africa
- Janvier D. Nkurunziza
- Sofia Cazzaniga
This paper explores the relationship between commodity dependence and human development measured as the human development index (HDI). Commodity dependence negatively affects human development through several channels, including the negative secular terms of trade affecting commodity-dependent developing countries (CDDCs), slow economic growth, high macroeconomic instability, and political instability. The paper finds that although the effect of commodity dependence on human development is negative, on average, this relationship is complex. It could differ depending on the level of dependence as well as the type of commodity a country depends on. This negative effect is strongest in countries where commodities account for more than 60 per cent of total merchandise exports.