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International commodity control : retrospect and prospect

Author

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  • Gilbert, Christopher L.
Abstract
International commodity agreements (ICAs) fit uneasily in a world in which markets are becoming globalized and increasingly competitive. Development policy - both as preached by international agencies and as practiced by typically democratically elected and nonsocialist governments in the major producing countries - emphasizes productive efficiency, product quality, and effective marketing. This is a long way from the ideology that gave central place to supply restrictions operating through central marketing boards and quota allocations. In today's less centralized, more competitive world, the winners and losers from commodity stabilization are more evenly distributed across producing and consuming countries. Commodity policy is no longer a matter of redistribution from consumers to producers. This institutional change has been reinforced by the widespread belief - evidenced, for example, by the collapse of the international tin and coffee agreements - that commodity market stabilization through international agreements cannot succeed. In earlier decades, the belief that stabilization could and would improve the position of commodity producers provided the impetus for resolving some of the problems that intervention threw up. Since the collapse of the tin market in 1985, the belief that commodity market stabilization cannot work has undermined producers'willingness to try to resolve difficulties within existing ICAs and has reinforced the suspicion of consumer governments that these agreements were in no one's interests. In the current climate, encouraging competitive markets, state interventions are seen as requiring clear justification in terms of market failure. The existence of active futures markets in all of the industries that have commodity agreements makes justification along these lines problematic. But the"commodity problem"has not disappeared, and producers may look for other mechanisms to raise prices from often very low levels in industries experiencing excess capacity. Developed country governments may be forced to decide whether they prefer to see markets controlled by producer cartels (where they will lack representation) or under the auspices of international commodity agreements.

Suggested Citation

  • Gilbert, Christopher L., 1995. "International commodity control : retrospect and prospect," Policy Research Working Paper Series 1545, The World Bank.
    • Handle: RePEc:wbk:wbrwps:1545
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    References listed on IDEAS

    as
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    Cited by:

    1. Julie Subervie, 2008. "The Variable Response of Agricultural Supply to World Price Instability in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 72-92, February.
    2. Ronchi, Loraine, 2006. "Fairtrade and market failures in agricultural commodity markets," Policy Research Working Paper Series 4011, The World Bank.
    3. Raymond Swaray, 2007. "How did the demise of international commodity agreements affect volatility of primary commodity prices?," Applied Economics, Taylor & Francis Journals, vol. 39(17), pages 2253-2260.
    4. Daniel Verdier, 2022. "Bargaining strategies for governance complex games," The Review of International Organizations, Springer, vol. 17(2), pages 349-371, April.
    5. Swaray, Raymond, 2011. "Commodity buffer stock redux: The role of International Cocoa Organization in prices and incomes," Journal of Policy Modeling, Elsevier, vol. 33(3), pages 361-369, May.
    6. Anderson, Jock R., 2003. "Risk in rural development: challenges for managers and policy makers," Agricultural Systems, Elsevier, vol. 75(2-3), pages 161-197.

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