If the economy of a country is dependent upon a single commodity, the wealth distribution in that country depends upon who controls that commodity. As a result, political instability is common in such countries. Studies have shown that political instability and commodity dependence follow a nonlinear relationship.
Q. Why is dependence on exports bad?
For countries heavily reliant on exporting commodities, the volatility of world prices provides an obvious risk. But even with manufactured products whose prices are more predictable, export-driven countries risk suffering when there is a downturn in global demand leaving huge amounts of spare capacity.
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Q. Who is the most commodity-dependent region in the world?
Developing countries almost exclusively affected With 89% of countries in Sub-Saharan Africa being commodity-dependent, it is the hardest-hit region. It is followed by the Middle East and North Africa, where 65% of countries depend on commodities.
Q. What countries are highly dependent on export commodities?
Countries with high dependence on a single export commodity are concentrated in certain regions: 21 in Sub-Saharan Africa, 14 in Latin America and the Caribbean and six in the South Pacific Islands. Thirty-two of these countries are LDCs and/or small island developing States (SIDS);
Q. How does dependence on other countries become a problem?
Foreign dependency generally fosters underdevelopment in the dependent country; a country’s adoption of policies tailored to the interests of a stronger country may inhibit the weaker country’s domestic growth, speed environmental destruction, or create temporary growth that precludes sustainable development and …
Q. What is foreign aid dependency?
Aid dependency refers to the proportion of government spending that is given by foreign donors. What causes dependency is when aid is used, intentionally or not, as a long-term strategy that consequently inhibits development, progress, or reform.
