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Commodity price stabilization: The need for a policy mix that breaks the vicious cycle of commodity dependence and price volatility

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  • Tröster, Bernhard

Abstract

The concept of the 'resource curse' has typically been used to explain the adverse effects of resource abundance on economic growth and development. More recently, however, the validity of this approach has been challenged. Not the abundance of natural resources per se, but the ability to cope with the volatility of commodity prices is now seen as one of the major factors for the development of commodity-dependent low-income countries (CDLICs). The reduction of economic uncertainty caused by unstable commodity prices is therefore a central policy objective. Policy interventions at both, the global regional and national level targeting commodity price stability are necessary for resource-rich countries in order to implement commodity-based development strategies, which can ultimately lead to structural change.

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  • Tröster, Bernhard, 2018. "Commodity price stabilization: The need for a policy mix that breaks the vicious cycle of commodity dependence and price volatility," Policy Notes 20/2018, Austrian Foundation for Development Research (ÖFSE).
    • Handle: RePEc:zbw:oefsep:202018
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    1. Küblböck, Karin & Staritz, Cornelia, 2014. "Regulation of commodity derivative markets: Critical assessment of reforms in the EU," Policy Notes 12/2014, Austrian Foundation for Development Research (ÖFSE).
    2. Stefan Ederer & Christine Heumesser & Cornelia Staritz, 2016. "Financialization and commodity prices -- an empirical analysis for coffee, cotton, wheat and oil," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(4), pages 462-487, July.
    3. Cornelia Staritz & Susan Newman & Bernhard Tröster & Leonhard Plank, 2015. "Financialisation, price risks, and global commodity chains: Distributional implications on Cotton Sectors in Sub-Saharan Africa," Working Papers 2015/04, Maastricht School of Management.
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