2nd to 4th September 2009, University of Ulster
We are now accepting abstracts for the themed conference panel “Economic Crisis and Commodity Dependent Countries”
We would welcome papers that deal with:
For a more detailed description of the panel, please see the abstract below.
The deadline for receiving abstracts is the 27th April.
Please submit your abstract to Susan Newman at sn23@soas.ac.uk with “DSA commodities panel” in the subject, copied to Frances Hill at conference@devstud.org.uk.
For more information on the conference and available bursaries see:
The association between commodity-dependence and low levels of economic development has been widely discussed in economic literature and development debate, most notable by Prebish (1950) and Singer (1950), and later by Maizels (1992) and UNCTAD (2002). Low income countries with export structures dominated by primary commodities have endured a collapse in growth rates throughout the 1980s and 1990s. The literature puts forward a number of different channels via which commodity-dependence can undermine economic growth and development. When commodity prices are low, declining export revenues may force governments to run higher deficits or reduce public consumption and investment. Declining export revenues also undermines investment of the private sector since the capacity of firms to import productive inputs is reduced. The situation is exacerbated by credit constraints and the expectation of further declines in the price (Birdsall and Hamoudi 2002). Export booms in extractive primary commodities have not translated to increases in real incomes owing in part to the problem of Dutch Disease (Ross 1999).
Since 2002, however, the issue of commodity-dependence has been absent from policy debates as the price primary commodities experienced a positive trend until July 2008. The commodities boom between 2002-2008 has been attributed to the demand explosion associated with the rapid industrialisation of China and India in this period (Kaplinsky 2008) and the growth in interest in commodities as an asset class by portfolio investors.
The onset of the current economic crisis marked the end of the commodity boom and prices across all primary commodities have suffered a sharp decline. It is therefore timely to revisit the relationship between commodity dependence and economic development in the contemporary setting. By building upon the work by young academics from the IIPPE[1] commodity studies working group (CSWG), the proposed panel will discuss the implications of the current crisis for commodity-dependent developing countries in two related sessions.
The first session will look closely at the transmission channels of the crisis on developing countries via its impact on commodity prices. Firstly, the session will discuss the role of China and the other BRICS in determining the prices of commodities exported by low income countries over the recent boom period and the implications of falling demand from the BRICS on the price of commodities exported by low income countries. Second, the papers will examine the role of portfolio investors on the price behaviour of exchange traded primary commodities. On the basis of recent price and trading data from commodity futures exchanges the session will present an investigation of the extent to which the withdrawal of financial investors from these exchanges have contributed to the sharp price decline since July 2008.
The second session will deal with the implications of commodity price swings in commodity-dependent low income countries and emerging markets. Drawing from the expertise from the IIPPE CSWG in terms of methodological approaches, particularly various commodity chain analyses, contributions in this session will build on new theoretical frameworks and research developed by members of the study group.
Both micro- and macroeconomic impacts of commodity price swings in developing countries will be discussed. On the macroeconomic level, the session will address the implications on domestic currency and price of a dramatic fall in foreign exchange that occurs with a commodity slump. It addition it will address the consequences of this on i) the challenges that are posed in terms of adopting specific exchange rate and monetary frameworks in developing countries; and ii) how a fall in the GDP contribution from the commodity sector has determined a reduction in the government budget and the complications that this has for fiscal management. In so doing, issues of ownership and taxation will be highlighted as important factors in terms of economic linkages and macroeconomic management, thus challenging the prevailing structures of property rights in a number of mineral exporting developing countries.
On the micro level, the panel will discuss the impacts arising from agricultural commodity price volatility and decline in the context of specific sectoral and country case studies. Detailed case studies can reveal a complex and diverse picture regarding the transmission, impact and response to commodity price instability across and within villages. Only with a fuller understanding of the true institutional challenges facing liberalised commodity sectors in low-income countries today, is it possible to appreciate why the effects of commodity price instability have been so varied and complex.
The examination of different countries, commodities and questions within this panel reveal the limits of previous research on commodity issues and development. The different approaches taken by these studies demonstrate the need for detailed case study research to uncover the processes through which commodity price instability affects different agents, stakeholders and countries. Furthermore, research for this panel demonstrates the changes that have taken place within developing countries and in the international arena concerning commodity markets. Understanding these changes and the mechanisms through which they have interacted with commodity price instability expands current research.
[1] International Initiative for Promoting Political Economy