ABSTRACT
As a source of wealth, commodities offer a great domestic resource and yet their ability to deliver growth – especially for developing countries – has been under question. From the 1950s onwards, commodities suffered from volatile prices, short-lived price booms and deterioration of terms of trade relative to manufactures. The low and often volatile commodity prices over a short term can have negative consequences for export revenues. Sustained changes over a medium or long term have relevance for a country’s terms of trade and therefore for the industrial and trade policies and the priority that is given to the commodities sector within an economy. Countries that have natural resources can benefi t from trading with countries in need of these resources. In an increasingly integrated world, emerging economies unable to meet their demand from domestic sources are turning towards international markets to source raw materials for their growth. As the demand and supply of commodities becomes increasingly global, the factors affecting the price of these goods are also becoming increasingly international.
