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Development Account Projects

Capacity-building for diversification and commodity-based development

Background:

The international community has recognised, for example in General Assembly resolution 53/174, that horizontal and vertical diversification by commodity dependent developing countries is a priority for their development and invited UNCTAD to provide assistance to developing countries in this respect. Contributing to vertical and horizontal diversification of commodity dependent countries was also specified at UNCTAD IX as one of the areas of focus for UNCTAD's technical assistance. World trade is rapidly growing for high value commodities, mostly foodstuffs that could easily be supplied by these countries, and processed forms of the products currently exported by them without processing. Industrialised countries and a small number of developing countries have been generally successful in exploiting these dynamic and lucrative markets, while the others, particularly LDCs and African countries, have been left behind. The enterprise sector has been unable to adapt itself to the liberalised and more exigent trading environment, and its needs for support are not effectively prioritised. Government policies also need to be reviewed in the current trading framework, and support that could be provided with the meagre resources of the governments need to be selective and focused. The civil society and institutions also have a crucial facilitating role in the diversification process.

Objective:

To assist the enterprise sector in developing countries to adapt to the liberalized and more exigent trading environment with government policies revised to reflect the trading framework that prevails today

Expected accomplishments:

  • Improved capacity of Governments to formulate focused, effective and sequenced policies for the promotion of horizontal, vertical and geographical diversification of production and trade structures;
  • Increased competence of enterprises in adapting their business strategies and supplies to the post-Uruguay Round trading framework ;
  • Stronger linkages between the commodity sector and the rest of the economy.

Effects and Impact:

The project enabled enterprises in commodity dependent countries to adapt their diversification strategies and business practices to modern market exigencies by conducting policy-oriented studies, organizing regional workshops, developing training materials and by providing advisory and technical assistance to governments and enterprises in identifying diversification opportunities and competitive advantages. Diversification strategies were shared at the 8 regional and 6 national workshops held under the project between 2000-2004 on a wide range of topics, covering both agricultural and mineral economies. While the impact of the project would normally appear indirectly and in the medium term in the development of government policies and the adoption of private sector strategies, concrete and easily identifiable impacts have also been observed. Examples in this respect include intensified national discussion on the problems of small scale horticultural producers in Kenya, the development of a national plan for horticulture sector development in Nigeria, and the decision to devise a programme for coco wood development in Solomon Islands, spearheaded by the Commodity Export Market Authority (CEMA), a semi-autonomous organization. Several private sector participants have also established contacts and expressed their intention to utilize the lessons from the experience of successful firms in their activities.