A farmer in Ethiopia can grow some of the world’s most valuable coffee. Yet the largest profits are often made thousands of miles away, after the beans have left the country. This captures a persistent problem many developing countries are facing today, in which they are rich in what the world wants, but capture relatively little of the value created from it.

In 2025, primary goods accounted for 76.7% of Africa’s merchandise exports. By contrast, manufactured goods dominate the exports of Europe, North America and much of Asia1. The problem is not that countries export commodities but rather that many remain concentrated at the lowest-value stages of global supply chains.

Consider coffee. Ethiopia is one of the world’s major producers of Arabica coffee, yet it has historically exported mainly unprocessed green beans. A 2014 World Bank study found that these could sell for around $2 per kilogram at the time, while roasted Ethiopian coffee could retail internationally for as much as $40 per kilogram2. The difference isn’t simply the physical coffee, but rather everything that happens around it, including processing, roasting, packaging, branding, marketing and distribution. This is the basic logic of value addition. A country does not necessarily become richer by producing more of the same raw material. It becomes richer when it develops the capabilities to process, manufacture and sell increasingly sophisticated products.

This helps explain why commodity dependence can be such a difficult development trap. When more than 60% of a country’s merchandise exports come from commodities, UN Trade and Development classifies it as commodity-dependent. In 2021 to 2023, 95 of 143 developing economies met this definition3. Commodity prices are also notoriously volatile. A country exporting oil, copper or coffee has little control over the price it receives. When prices rise, export revenues surge. When they fall, government revenues, foreign exchange earnings and investment can fall with them4.

Manufacturing offers something different. It creates opportunities to build capabilities that can be applied to increasingly complex products. A country that learns to process cocoa can potentially move into chocolate. A country exporting raw minerals can develop metal processing. Coffee can become packaged coffee, branded coffee and eventually a wider food-processing industry.

The difficult question is why this transition has been so limited. One possible explanation is infrastructure. Processing a commodity requires reliable electricity, transport, finance and access to markets. A factory cannot compete internationally if power cuts are frequent or getting a container to a port takes weeks. Africa’s infrastructure constraints therefore do more than inconvenience consumers; they raise the cost of moving up the value chain.

Trade policy can matter too. Developing countries can face tariff escalation, where processed products face higher tariffs than the raw materials used to make them. This creates an odd incentive as exporting a raw product can be easier than exporting the finished one5.

But governments cannot simply decree industrialisation into existence. Building a factory does not automatically create a competitive industry. The skills, technology, institutions and firms needed to operate it have to develop alongside it.

This is why the examples of countries that have diversified are particularly important. Indonesia and Guatemala, for instance, have recently reduced their commodity dependence, according to UN Trade and Development, showing that commodity dependence is not necessarily permanent4. The opportunity is particularly significant for Africa's mineral exporters. Demand for cobalt, lithium, copper and other minerals is rising as the global economy transitions towards cleaner technologies. Africa possesses substantial shares of several of these resources. But simply exporting the minerals could reproduce the same pattern that has existed for decades: extracting value at home and capturing much of the higher-value processing elsewhere6. The objective, then, should not be to stop exporting commodities. They are an important source of income and comparative advantage. The challenge is to use them as a starting point for developing new productive capabilities.

Overall, development is ultimately about becoming better at producing things the world is willing to pay for. For many developing countries, the next step may not be finding a completely new resource, but rather learning to capture more of the value from the ones they already have.

Footnotes

  1. UN Trade and Development, UNCTADstat Data Insights (opens in a new tab), 30th June 2026.

  2. World Bank, Unleashing the Potential of Ethiopia's Export Industry (opens in a new tab), 22nd July 2014.

  3. UN Trade and Development, The State of Commodity Dependence 2025 (opens in a new tab), 21st July 2025.

  4. UN Trade and Development, Commodity dependence runs deep. Developing countries must add value to turn the tide (opens in a new tab), 21st July 2025. 2

  5. UN Trade and Development, 'Tariff escalation' keeps developing economies from moving up global value chains (opens in a new tab), 14th March 2025.

  6. UN Trade and Development, Unlocking value: Helping African economies diversify beyond raw minerals (opens in a new tab), 19th November 2025.