The Macro Management of Commodity Booms: Africa and Latin America's Response to Asian Demand
40 Pages Posted: 10 Nov 2008 Last revised: 12 Dec 2014
Date Written: August 2008
Abstract
Strong growth in China and India has led to improvements in raw-material exporting countries' terms of trade and attracted complementary finance. The long-term challenge for these countries, where institutions are often fragile, is to avoid the so-called "resource curse". This paper aims to provide a comparative perspective between policy choices in commodity exporting countries, contrasting the experiences of Africa and Latin America. First, it highlights global macroeconomic links between the Asian Drivers (China and India) and these regions. Second, it discusses optimal policy responses from a macroeconomic and institutional perspective. Third, it presents empirical evidence on macroeconomic, particularly fiscal responses to Dutch disease and the specialization effects caused by Asian Drivers' demand and assesses the benefits and challenges offered by the Asian Drivers from a macro perspective for both Africa and Latin America.
Keywords: Commodity booms, Asian Drivers, Africa, Latin America, Dutch disease
JEL Classification: F00, O11, 057, E62
Suggested Citation: Suggested Citation
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