Commodities and Development Report 2021: escaping from the commodity dependence trap through technology and innovation

The 2021 edition of the Commodities and Development Report explores how technological development and innovation can help commodity-dependent developing countries (CDDCs) achieve economic diversification and value addition. The report, entitled "Escaping from the commodity dependence trap through technology and innovation", highlights that most developing countries are commodity dependent and that their movements into and out of commodity dependence are not random. Once a country becomes commodity dependent, the likelihood of becoming non-dependent is very low. In other words, commodity dependence is a trap, and it entails many serious socioeconomic challenges. The report shows that commodity dependence is associated with low levels of economy-wide labour productivity, low productivity growth, high volatility of productivity growth and a high frequency of negative productivity shocks. It identifies a large potential for productivity increase in CDDCs through both intrasectoral productivity growth as well as structural change. In this regard, the report argues that technological upgrading and innovation can play important roles in an increase in productivity and economic diversification.