Araujo, Billy Melo --- "Commodity Agreements and Markets" [2011] ELECD 411; in Botchway, N. Francis (ed), "Natural Resource Investment and Africa’s Development" (Edward Elgar Publishing, 2011)

Book Title: Natural Resource Investment and Africa’s Development

Editor(s): Botchway, N. Francis

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848446793

Section: Chapter 10

Section Title: Commodity Agreements and Markets

Author(s): Araujo, Billy Melo

Number of pages: 40

Extract:

10. Commodity agreements and
markets
Billy Melo Araujo

1 INTRODUCTION

The term `commodity dependence' is an integral part of any serious
discussion relating to the economic development of Africa. Commodities
are unprocessed raw materials originating from agricultural activities
(coffee, cocoa, cotton, wheat, and so on) or extractive activities (hydro-
carbons, minerals, metals, and so on). Their export constitutes the
largest source of revenue in Africa, and in a number of countries three or
four commodities represent the main source of export earnings, govern-
ment revenue and employment. This means that African countries are
particularly vulnerable to fluctuations in commodity prices.
Sub-Saharan Africa's share of global trade fell to 1.5 per cent in 2001
from a high of 6 per cent in 1980 and, excepting oil, the terms of trade
in the primary commodities sector have been steadily declining for
about 30 years.1 The commodity price boom which occurred between
2001 and 2008 as a result of global economic growth offered African
countries only a brief reprieve from the general trend of decline in the
commodity terms of trade. As a result of the recent financial crisis,
the prices of major commodities such as oil, metals and food have
fallen sharply since mid-2008. According to the World Bank's Global
Economic Prospects 2009, growth of the gross domestic product (GDP)
of developing countries as a whole was expected to decline from 7.9
per cent in 2007 to 4.5 per cent in 2009, while growth ...