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3rd China Postgraduate Network Annual Conference 8-9 th April 2010: Oxford University

The Southern Engines of Growth and Hard Commodity Prices: Does China Lead to Disruptive Development?. 3rd China Postgraduate Network Annual Conference 8-9 th April 2010: Oxford University Masuma Farooki (m.z.farooki@open.ac.uk). The Main Issues. Commodities in Development Commodity Prices

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3rd China Postgraduate Network Annual Conference 8-9 th April 2010: Oxford University

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  1. The Southern Engines of Growth and Hard Commodity Prices:Does China Lead to Disruptive Development? 3rd China Postgraduate Network Annual Conference 8-9th April 2010: Oxford University Masuma Farooki (m.z.farooki@open.ac.uk)

  2. The Main Issues • Commodities in Development • Commodity Prices • China’s Demand for Commodities • Optimism for Commodity Exporting Developing Countries?

  3. Commodities In Development The Resource Curse • Deteriorating Terms of Trade • Price Volatility • Enclave Economies • Political Instability and Conflict

  4. What’s in a Price Movement? Commodity Boom: A peak that is much higher than previous peaks. The Cycle: Short Term; a peak/trough to peak/trough measurement. The Super Cycle: Medium Term; a prolonged trend rise over a decade.

  5. Commodity Price Movements 1960-2008 Price Boom Price Cycle Super Cycle Source: UNCTAD All Commodity Price Index

  6. 2003-2010 Commodity Prices Source: UNCTAD Monthly Commodity Price Statistics

  7. What does the 2003-08 Price Movement represent? • Is it just a Price Boom? • Is it a temporary interruption of a Super Cycle, due to the financial crisis?

  8. To be a Super Cycle you need: • Price rise over a decade or more • Be driven by demand in an expanding economy

  9. The 2003-08 Super Cycle Source: UNCTAD All Commodity Price Index

  10. A Southern Driver of Growth • China: The Large Country Impact • Volume of Demand • International Sourcing • China: The Developing Country Impact • Resource Intensive Growth • Years to maturity

  11. China’s Share of Global Consumption of Base Metals Source: 1 Macquarie Commodities Research (2008)

  12. Optimism for Commodity Exporting Developing Countries?

  13. Chinese GDP/Capita and Mineral Consumption

  14. China’s Importance for Commodity Exporting Developing Countries (1990-2006) Source: Author’s calculations from COMTRADE via WITS accessed in July 2009.

  15. Projected Global Growth Source: IMF World Economic Outlook (January 2010)

  16. China’s demand is expected to remain strong in the medium term. • China will rely on commodity imports for its consumption. • Commodity Exporting Developing Countries can benefit from this opportunity. • Domestic policy will inform how these benefits are translated into development.

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