Commodity Price Boom Underlines global Links
| Author | Nikola Spatafora and Irina Tytell |
| Position | IMF Research Department |
| Pages | 64 |
Page 64
Emerging and developing economies have become significantly more integrated with the global economy in recent years, against the backdrop of soaring commodity prices and steadily improving institutions and policy frameworks, according to a new IMF study.
Published in the April 2008 World Economic Outlook and entitled "Globalization, Commodity Prices, and Developing Countries," the study examines this growing integration and assesses its sustainability.
Although many developing economies continue to depend on commodity trade, their exports have become much more diversified in terms of both composition and destination. The volume of manufacturing exports relative to real GDP has grown steadily across the developing world, with gains ranging from about 2 percentage points in the Middle East and Africa to more than 20 percentage points in Asia since the late 1980s.
Advanced economies remain the most important destination for exports, but buoyant demand across developing economies has also helped advance industrialization in a broad range of countries. In 2000 U.S. dollars, manufacturing exports to advanced economies have tripled since the early 1990s, whereas those to China have grown even more dramatically, albeit from a low initial level (see chart).
Manufacturing exports to other developing countries in Asia and elsewhere have also picked up. And commodity exports to China and other Asian countries have risen sharply, but even commodity exporters have stepped up their manufacturing trade.
By historical standards, the current commodity price boom has been broad based and sustained, with the prices of many commodities-oil, metals, major food crops, and some beverages-rising sharply. However, different developing economies have reaped uneven benefits, reflecting differences in the composition and relative magnitudes of their commodity exports and imports. For instance, since 2000, the commodity terms of trade have risen by more than 40 percent in the Middle East but fallen slightly in Asia.
Commodity-exporting developing economies currently experiencing a boom have benefited from it more than from previous booms in a number of ways. Their median total export volumes have grown more than 3 percentage points a year faster than in past booms, as have manufacturing exports. The rapid growth in manufacturing export volumes may have benefited...
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