International Commodity Agreements: Key to Development?

Abstract

This paper has attempted to bring the methods and purposes of international commodity agreements into focus and to thus discover whether they are worth the energy which the poor countries might exert to form them. I have three main conclusions. First, we have seen that stability is probably an unsuitable goal, for the effects of fluctuations are not likely to be felt on internal economies and that if they are felt, the fault could well lie in governmental policy. Second, opportunities at present for successful restrictive quota agreements are limited at best. Though they are difficult to predict, long-run elasticities are probably well above unity for most primary products which would benefit the South through a price rise. In addition, the effects of increased export receipts may or may not be beneficial: flows of money into LDC's are marked for their unproductiveness while LDC governments are marked for their abilities to use additional monies to prop themselves up. Third, if we accept the arguments of Kindleberger and Myrdal, who insist that international economic integration is an important key to development, then we can look at commodity agreements in a new light. The criteria for success would now be unity -- how much centripetal force is exerted by the agreements on each producer -- and longevity. [From Conclusion]