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The Impact of Commodity Market on the Economy of Developing Countries

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  • Chowdhury, Emon

Abstract

This paper examines the impact of commodity markets on the economies of developing countries. Commodity markets play a crucial role in shaping the economic landscape of these nations by contributing to export earnings, GDP, and overall economic growth. However, the impact is not straightforward, as price volatility and fluctuations pose risks to commodity-dependent economies. Reliance on commodities hampers investment diversification, technological progress, and human capital development. Successful examples of economic transformation through diversification and innovation can guide developing countries, but challenges arise from corruption, political instability, and inadequate institutions. Factors influencing the evolution of commodity markets in developing countries include population and income growth, technological innovation, globalization, and trade liberalization. Despite challenges, opportunities exist through technological advancements, diversification, regional integration, and sustainable production practices. The impact of commodity markets on economic growth is complex, with both positive and negative effects, as exemplified by diverse outcomes among different regions and groups of countries. To promote sustained economic growth, developing countries should diversify their economies, invest in other sectors, and prioritize innovation and human capital development.

Suggested Citation

  • Chowdhury, Emon, 2023. "The Impact of Commodity Market on the Economy of Developing Countries," MPRA Paper 119462, University Library of Munich, Germany, revised 05 Dec 2023.
    • Handle: RePEc:pra:mprapa:119462
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    File URL: https://mpra.ub.uni-muenchen.de/119462/1/MPRA_paper_119462.pdf
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    References listed on IDEAS

    as
    1. Radetzki,Marian & WÃ¥rell,Linda, 2020. "A Handbook of Primary Commodities in the Global Economy," Cambridge Books, Cambridge University Press, number 9781108970914, January.
    2. Emon Kalyan Chowdhury, 2022. "Disastrous consequence of coronavirus pandemic on the earning capacity of individuals: an emerging economy perspective," SN Business & Economics, Springer, vol. 2(10), pages 1-16, October.
    3. Liu, Haiying & Saleem, Muhammad Mansoor & Al-Faryan, Mamdouh Abdulaziz Saleh & Khan, Irfan & Zafar, Muhammad Wasif, 2022. "Impact of governance and globalization on natural resources volatility: The role of financial development in the Middle East North Africa countries," Resources Policy, Elsevier, vol. 78(C).
    4. Olayeni, Olaolu Richard & Tiwari, Aviral Kumar & Wohar, Mark E., 2020. "Global economic activity, crude oil price and production, stock market behaviour and the Nigeria-US exchange rate," Energy Economics, Elsevier, vol. 92(C).
    5. Emon Kalyan Chowdhury & Shafaitun Nahar, 2017. "Perceptions of Accountants toward Sustainability Development Practices in Bangladesh," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 7(3), pages 112-119, September.
    6. Meinhold, Kathrin & Dumenu, William Kwadwo & Darr, Dietrich, 2022. "Connecting rural non-timber forest product collectors to global markets: The case of baobab (Adansonia digitata L.)," Forest Policy and Economics, Elsevier, vol. 134(C).
    7. Emon Kalyan Chowdhury & Umme Humaira, 2023. "The Russia–Ukraine conflict and investor psychology in financial markets," Economic Affairs, Wiley Blackwell, vol. 43(3), pages 388-405, October.
    8. Emon Kalyan Chowdhury, 2022. "Strategic approach to analyze the effect of Covid-19 on the stock market volatility and uncertainty: a first and second wave perspective," Journal of Capital Markets Studies, Emerald Group Publishing Limited, vol. 6(3), pages 225-241, October.
    9. Radetzki,Marian & WÃ¥rell,Linda, 2020. "A Handbook of Primary Commodities in the Global Economy," Cambridge Books, Cambridge University Press, number 9781108841542, January.
    10. Luqman, Muhammad & Mugheri, Adil & Ahmad, Najid & Soytas, Ugur, 2023. "Casting shadows on natural resource commodity markets: Unraveling the quantile dilemma of gold and crude oil prices," Resources Policy, Elsevier, vol. 86(PA).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Commodity markets; Developing countries; Economic growth; Price volatility; Diversification;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • K2 - Law and Economics - - Regulation and Business Law

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