Egypt skips ‘Commodity Dependence’ trap, thanks to diverse exports: Report

CAIRO – 23 October 2021: As some countries depend commercially for their exports on one or two commodities, representing around 60 percent of their total exports, which is a phenomenon called “Commodity dependency,” Egypt was revealed to have skipped this trap thanks to its diverse exports.

According to the cabinet, reports showed Egypt is one of the countries that are outside this trap due to the government’s keenness on expanding manufacturing activities.

Depending on certain commodities in exports could represent a danger situation for countries, as they become economically exposed to fluctuations in prices of these commodities and their global demand, and likely to be vulnerable to commodity price shocks.   

According to reports, those countries may not succeed in getting out of this trap over the years.

In this context, the Information and Decision Support Center, affiliated with the Egyptian cabinet, issued a mini-report entitled: "A Glimpse of the Phenomenon and Concept of Commodity Dependence: A Criterion for Discrimination or an Opportunity to Transform into a Modern and Digital Economy?"

The report highlights this phenomenon - "commodity dependence" - in which countries may fall, noting that 60 percent of developing countries are characterized by this phenomenon, while only 13 percent of developed countries suffer from it, according to UNCTAD data that confirmed the severity of the fall in the "commodity dependency" trap.

The report of the Information Center clarified the recommendations made by UNCTAD to avoid this trap, the most important of which was to diversify the export basket, first, through the expansion of manufacturing industries, especially for countries dependent on oil exports or earth minerals, and secondly, industrial technological uses.

The organization also recommended the need to shift to a digital economy as a way to avoid this trap.

The report highlighted what Egypt has done to avoid falling into the trap. It said that Egypt has diversified its exports and manufacturing activities, for example: petrochemicals, fertilizers, and liquefied gas.

The report attached an overview of the top 20 exported commodity categories in Egypt, and their diversity was noted, as well as how the goals of the 2022/2021 plan for the industrial sector contributed to keeping Egypt out of this trap.