1887

Commodity Prices, Aid and Debt

Implications for LDCs, Small Vulnerable States and HIPCs

image of Commodity Prices, Aid and Debt

This study reveals the extent of persistent downward trends in commodity prices on least developed countries (LDCs), small vulnerable states (SVSs) and heavily indebted countries (HIPCs) and proposes a Joint Diversification Scheme exclusively for export diversification schemes in the commoditydependent poor countries. The report also proposes and outlines the establishment of a Joint Diversification Fund, in addition to regular aid flows as a longterm solution.

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Executive Summary

An overwhelming majority of the economies classified, not mutually exclusively, as least developed countries (LDCs), small vulnerable states (SVSs) and heavily indebted poor countries (HIPCs) rely predominantly on primary commodities for their production and exports. Serious problems are associated with excessive dependence on commodities. A rapid expansion in world supplies vis-à-vis depressed demand has caused a secular decline in relative commodity prices, which has served to highlight the long-term decline in real commodity prices.

English

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