Publisher's Synopsis
The long run decline in real commodity prices has had significant implications for least developed countries (LDCs), small vulnerable states (SVSs) and heavily indebted poor countries (HIPCs), who rely predominantly on primary commodities for their production and exports. Empirical investigation in this study has shown that the persistent downward trend in real commodity prices has resulted in significant foreign exchange losses for many commodity-dependent poor countries. Since the long-term solution to the problem of a secular declining trend in commodity prices lies in export diversification and changes in the production structure, as opposed to policies which encourage price and revenue stability, the study proposed a Joint Diversification Scheme exclusively for export diversification schemes in the commodity-dependent poor countries. For the aid-based compensation scheme, study proposes the establishment of a Joint Diversification Fund (JDF) in addition to regular aid flows. Efforts towards export diversification will have to be complemented by domestic policies aimed at the development of human resources, creation of a hospitable investment climate institutional capacity building and poverty alleviation to achieve a sustainable solution.
