1 - The Historical Framework

Summary

This introductory chapter provides a historical framework for world commodity markets. It considers four major themes. The first theme reviews the significance of primary commodities in the overall economy at different stages of economic development. The second tracks the long-run decline in bulk transport costs and explores the implications of this decline for the establishment of markets with a global reach for an expanding group of raw materials. The third theme focuses on the twentieth century. It demonstrates the greatly expanded role of public intervention and control in primary commodity production and trade from the early 1930s until the late 1970s, and the subsequent retreat of government involvement in favor of market forces. The fourth treats the recent strong growth in emerging economies, which has had, and continues to have, a profound impact on the world commodity markets.