Turning commodities into catalysts for sustainable development

Halfway towards the target date for achieving the Sustainable Development Goals, many commodity-dependent countries are struggling with a lack of resources and high indebtedness. This moment requires a policy shift. Against this backdrop, the Second Committee of the General Assembly and the Economic and Social Council (ECOSOC) convened a dialogue on leveraging commodities for sustainable development on 10 October.

The discussion, organized by UN DESA and co-convened with UNCTAD, highlighted the need to support commodity-dependent countries to move away from reliance on raw commodities with low value-added, which limits their ability to finance sustainable development. These countries are highly exposed to price shocks and, without access to upper parts of value chains, receive little compensation for their environmental costs.

As highlighted by the keynote speaker, Nobel Prize-winning economist Joseph E. Stiglitz: “The 21st-century economy is rife with market power, and developing countries and emerging markets typically do not get compensated adequately for their natural resources.”

The discussion underscored the dysfunction of the current market system for primary commodities, which has not adapted to the needs of developing countries. As options for an export-led growth model – so successful in East Asia in the 1980s and 1990s – have dwindled, shifting towards labor-intensive manufacturing alone may not generate enough decent jobs for the growing populations of most developing countries.

Leveraging commodities for sustainable development, with a core focus on investment, presents an alternative pathway. This may include diversification towards natural resource-based manufacturing and services, increasing local processing capacity, technological innovation, infrastructure development, and tax and export revenue maximization.

In addition, structural changes, such as the transition to renewable energy, are increasing the demand for critical materials abundant in developing countries. This is an opportunity to rewrite the rules of how natural resources are used, but requires addressing escalating tariffs and market power. Doing so can help countries turn their commodities into catalysts to finance sustainable development.

For more information: Second Committee of the UN General Assembly