Commodities are key for developing countries' economic integration. This article distinguishes two types of financial investors in commodities and emphasises differences in position taking motivation and price impacts. Index trader positions are positively correlated with roll returns, while money managers emphasise spot returns. During 2006-2009, index trader positions had a price impact for some agricultural commodities, as well as oil. During 2007-2008, money managers impacted prices for non-agricultural commodities, especially copper and oil. The financialisation of commodity markets may make it more difficult for developing countries to manage their resource sectors for sustained economic development.
This article examines how developing countries can use, and enlarge, existing policy space, without opting out of international commitments. It argues that: (i) a meaningful context for policy space must extend beyond trade policy and include macroeconomic and exchange‐rate policies that will achieve developmental goals more effectively; (ii) policy space depends not only on international rules but also on the impact of international market conditions and policy decisions taken in other countries on the effectiveness of national policy instruments; and (iii) international integration affects policy space through several factors that pull in opposite directions; whether it increases or reduces policy space differs by country and type of integration.
This paper reviews the literature on the fallacy of composition with an emphasis on labour-intensive manufactures. It briefly addresses the protectionist and the partial-equilibrium versions of the argument before focusing on general-equilibrium considerations and the debate on the manufactures terms of trade of developing countries. The review indicates a potential fallacy of composition problem in labour-intensive manufactures, where competition among different groups of developing countries for export market shares may constitute a new form of the fallacy of composition. The likelihood of a country that exports labour-intensive manufactures to become subject to the fallacy of composition rises with the increasing integration of several strongly populated low-income countries into world markets, while it declines with continuous structural change and favourable aggregate demand conditions particularly in developed and the advanced developing countries. Copyright Blackwell Publishers Ltd 2002.
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