Commodity Diversification: A Market Model

In: The journal of development studies: JDS, Band 18, Heft 1, S. 94-103

Abstract

Commodity diversification has been widely adopted by developing countries as a policy measure to tackle the problem of export instability. Arguments about diversification have emphasized the role of external demand conditions & the need to export manufactures. The importance of random supply factors in determining earnings from primary products has been overlooked as a potential source of greater stability. A model of commodity earnings is developed that distinguishes between market-related & producer-specific components of instability. Application to the export structures of 28 primary exporters suggests that this approach represents a useful guide to policymakers. 1 Table. HA.