Resource-Based Downstream Processing and Economic Resilience in Developing Economies: A Comparative Analysis of Indonesia and Gambia

Abstract

This study investigates the relationship between downstream processing policies, industrial investment, and economic resilience in Indonesia and Gambia, to identify policy lessons applicable to other developing economies pursuing resource-based industrialization strategies. The study is set within the broader context of Global South industrialization from 2010 to 2024, focusing on Indonesia's downstream commodity policy reforms, particularly the 2020 nickel ore export ban, and Gambia's groundnut and fisheries processing sector development within the ECOWAS trade framework. This study adopts a comparative quantitative approach using secondary data drawn from the World Bank Open Data, UN Comtrade, UNCTAD, the IMF World Economic Outlook, Indonesia's Badan Pusat Statistik (BPS), and the Gambia Bureau of Statistics. Panel data analysis and descriptive trend analysis are employed to assess changes in export value-added ratios, manufacturing output, foreign direct investment inflows, and economic resilience indicators across the study period. Preliminary findings indicate that Indonesia's downstream processing mandate significantly increased value-added export revenues and attracted upstream FDI in nickel smelting and battery manufacturing, contributing to measurable improvements in industrial GDP. In contrast, Gambia's processing sector remains constrained by infrastructural deficits and limited trade policy enforcement, resulting in marginal gains in value-added output despite natural resource endowments. Downstream processing policies, when supported by coherent industrial investment frameworks and institutional governance, can meaningfully strengthen economic resilience in resource-dependent developing economies. This study contributes to the literature by offering one of the first empirical comparative analyses between a Southeast Asian and a West African developing economy on downstream industrialization. It provides actionable policy insights for small commodity-dependent states and advances theoretical understanding of industrialization pathways in the Global South.