Recent events have rekindled interest inthe role of primary commodities in development. Was the boomin commodity prices from around 2003 through 2008 just acyclical event, or does it suggests that prices have enteredon a period of secular strength, driven by factors such asdemand in big, fast growing developing countries like China?It is notable that, while commodity prices fell sharply fromtheir peak in 2008 with the onset of the global recession,they generally remained much higher than previous recessionlows, often as high as in 2005-07, a period of robust worldgrowth. Furthermore, prices have also rebounded smartly overthe course of 2009. If a period of sustained commoditystrength is imminent, what are the implications fordevelopment policies? Development economists have longdebated the problems associated with the traditionally highspecialization in production and export of primarycommodities of most developing countries. Many argue thatdependence on primary commodities has proved to be apoisoned chalice or curse for development, which, given thisview, necessarily entails structural change and rapidindustrialization. Others, however, suggest that sustainedhigh commodity prices could reduce the relevance of anindustrialization-focused development strategy forcommodity-dependent, low-income countries (LICs). In thisnote authors briefly review four questions: how dependentare developing countries on primary commodity exports? Whatis the outlook for primary commodity prices? Is there anatural resource "curse" (or blessing)? Whatpolicies can help poor countries best manage commodityresources for long-run development?
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