International commodity trade: the implications on Malaysian agricultural commodities in the 1980's

Abstract

Trade in primary commodities, though evolves within the scenario of divergences in markets and fluctuations in prices, volumes and earnings for some commodities, has generally stimulated dynamic and steady growth of real export income of commodity producing countries in the developing and developed world. The peculiarities in the relationships of supply, demand and price for many of the primary commodities as well as conflicts on access to markets resulted in the declining share to the producers and exporters. This process creates the emergence of a sharp cleavage between the rich and the poor nations. Commodity trade does not exist in isolation; it is a part of total international trade in primary commodities and manufactures and, in turn, becomes an integral part of the international economic, monetary and political system. With the changing economic and political relations among countries and the growing serious exchange problems in commodities for a large number of countries, primary commodities also present a problem in international political economy. The prevailing scenario is further intrigued by widespread inflation in the major developed market and the spiralling increases in oil prices. The situation has not only seriously affected the economic and political situation of the developing countries but also brought about a reduced rate of growth of output in many developed market economy. This trend poses serious threat to growth of exports from the developing countries and to their terms of trade.