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Commodity Markets: Evolution, Challenges, and Policies

Commodity book cover

Commodity markets are integral to the global economy. Understanding what drives developments of these markets is critical to the design of policy frameworks that facilitate the economic objectives of sustainable growth, inflation stability, poverty reduction, food security, and the mitigation of climate change. This study is the first comprehensive analysis examining market and policy developments for all commodity groups, including energy, metals, and agriculture, over the past century. It finds that, while the quantity of commodities consumed has risen enormously, driven by population and income growth, the relative importance of commodities has shifted over time, as technological innovation created new uses for some materials and facilitated substitution among commodities. The study also shows that commodity markets are heterogeneous in terms of their drivers, price behavior, and macroeconomic impact on emerging markets and developing economies, and that the relationship between economic growth and commodity demand varies widely across countries, depending on their stage of economic development. Policy frameworks that enable countercyclical macroeconomic responses have become increasingly common—and beneficial. Other policy tools have had mixed outcomes.


"Discussions in commodity-exporting emerging markets are often based on ideas with little empirical and analytical support. This book, based on vigorous research, is a great contribution to improve our understanding of these economies. It provides robust empirical evidence including a long-term perspective on commodity prices. It also contains very thoughtful policy analysis, with implications for resilience, macroeconomic policies, and development strategies. It will be a key reference for scholars as well as policy makers."

 -- José De Gregorio, Dean of the School of Economic and Business, Universidad de Chile, Former Minister of Economy, Mining and Energy, and Governor of the Central Bank of Chile

"Commodity Markets: Evolution Challenges and Policies is a broad-ranging analysis of just about everything you have ever wanted to know about commodity markets. It has a broad sweep of commodity prices and production (primarily energy, metals, and agricultural commodities) over the past century, carefully documenting and rigorously analyzing the important difference in experiences across different groups of commodities. It is comprehensive in its historical coverage but also addresses contemporary issues such as an insightful analysis of the impact of the COVID19 pandemic and the Ukraine war on commodity prices. It draws out the impact of shocks, technology, and policy as drivers of demand and supply for a range of different commodities. This book is essential reading for anyone interested in the drivers of commodity prices and production over the last century and the implications for future trends."

 -- Warwick McKibbin, Distinguished Professor of Economics and Public Policy, Director of the Centre for Applied Macroeconomic Analysis, Director of Policy Engagement at the Australian Research Centre of Excellence in Population Ageing Research, Australian National University

"A sound understanding of commodity markets is more essential than ever in light of the Covid-19 pandemic, the war in Ukraine, and the transition from fossil fuels to renewable energy commodities. This volume offers an excellent, comprehensive, and timely analysis of the wide range of factors that affect commodity markets. It carefully surveys historical and likely future trends in commodity supply, demand, and prices, and offers detailed policy proposals to avoid the havoc that turbulent commodity markets can cause on the economies of commodity exporters and importers."

 -- Rick Van der Ploeg, Research Director of Oxford Centre for Analysis of Resource Rich Economies, University of Oxford

"Commodity prices tend to be seen as an aggregate, especially when they periodically move upward together. While these aggregate movements are important, this excellent and well-researched volume emphasizes the heterogeneity of commodity markets and the differing economic forces that act upon them. Heterogeneity calls for differentiated and tailored policy tools that take into account the specificities of markets, a message that analysts and policy makers would do well to heed."

 -- Ravi Kanbur, T.H. Lee Professor of World Affairs, International Professor of Applied Economics and Management, Cornell University

"Commodity markets are complex and constantly evolving. This insightful and well-structured study of all the ins and outs of commodity markets is a valuable addition to the literature for understanding how these markets function and their impacts on the global economy. As the war in Ukraine and the COVID-19 pandemic continue to have substantial impacts on commodity prices and supply chains, this incredibly timely study offers analysts and policy makers a firm foundation for making better predictions and developing more effective policy responses."

 -- Abdolreza Abbassian, Former FAO Senior Economist, and G20-AMIS Secretary

"I wish I had this book earlier in my career! Commodity Markets: Evolution, Challenges, and Policies provides an insightful analysis of the dynamics of commodity markets and their implications on the broader economy. A must-read for anyone interested in commodity markets. "

 -- Xiaoli Etienne, Associate Professor and Idaho Wheat Commission Endowed Chair in Commodity Risk Management, University of Idaho

"While many African countries were spared the ravages of the Covid-19 pandemic, their economies suffered because commodity prices collapsed. Since then, the war in Ukraine has affected developing countries thousands of miles away because the price of oil, gas, and food have spiked. Commodity markets not only receive the impact of global shocks, but they transmit them to commodity-dependent countries around the world. This book lucidly explains how these shocks affect commodity markets and, in turn, how fluctuations in these markets affect developing economies. As the world deals with climate change and the energy transition, these findings will become even more important."

-- Shanta Devarajan, Professor of the Practice of International Development, Georgetown University

"This book brings into one place otherwise scattered information on the evolution of commodity markets, causes and impacts of price shocks, and the drivers and implications of commodity demand. These are issues of great importance to policy makers, particularly in commodity-dependent developing countries. Three major events that have recently affected commodity markets, namely, the energy transition, the COVID-19 pandemic, and the war in Ukraine, highlight the vulnerability of commodity-dependent countries to price shocks. This book should be a source of inspiration for these countries as they attempt to move away from the commodity dependence trap that has afflicted them for so long. I strongly recommend this book to colleagues working on the topic."

-- Janvier Nkurunziza, Officer in Charge, Commodities Branch, United Nations Conference on Trade and Development

"Commodity Markets: Evolution, Challenges, and Policies will provide the J.P. Morgan Center for Commodities with the comprehensive textbook we have always wanted to write. Currently, the vast majority of commodity-related textbooks are dominated by trading issues, with a limited focus on market fundamentals. As a result, our instructors typically rely on a wide mix of articles, book chapters, and case studies for their respective courses. By providing a comprehensive detailed coverage of these issues, this book fills a major gap in the literature."

 -- Tom Brady, Executive Director, J.P. Morgan Center for Commodities, University of Colorado Denver



The Long Shadow of Informality: Challenges and Policies (May 2021)

Global Productivity: Trends, Drivers, and Policies (July 2020)

Global Waves of Debt: Causes and Consequences (December 2019)

A Decade After the Global Recession (November 2019)

Inflation in Emerging and Developing Economies (November 2018)






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