Research Paper 4, November 2005

The Potential Impacts of Nano-Scale Technologies on Commodity Markets: the Implications for Commodity-Dependent Developing Countries.

Commodity production is the mainstay of the economy in most developing countries. According to UNCTAD, commodity dependence is measured by the share of the three leading commodities in a given country’s total exports. The bigger the share, the more dependent the country is. Commodity dependence and poverty are closely intertwined. Commodities provide the primary source of income for the South’s rural poor. According to the Common Fund for Commodities, of the two and a half billion people engaged in agriculture in developing countries, an estimated one billion derive a significant part of their income from the production of export commodities. Ninety-five out of 141 developing countries depend on commodities for at least 50 per cent of their export earnings; 46 developing countries depend on three or fewer commodities for more than half of their total export earnings.

Strategies to address the economic vulnerability of commodity dependent developing countries frequently centre on efforts to reduce trade barriers and promote a fairer international trading system. However, the emphasis on trade alone is not sufficient, particularly in the light of rapid advances in nano-scale science and technologies. In a very real sense, technology is poised to trump trade as the defining feature of comparative advantage in the 21st century. In the coming decades, nano-scale technologies could make geography, raw materials, and even labour, irrelevant.

This report provides a brief introduction to nano-scale technologies and examines their potential impacts on commodity dependent developing countries.

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