COMMODITY EXPORT BOOMS IN DEVELOPING COUNTRIES

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Abstract
This article surveys the experiences of commodity-exporting countries faced with resource discoveries and widely fluctuating world prices. Favorable developments of the commodity export market often prove to be a mixed blessing, as poor boom management leads to major internal and external economic imbalances. Many developing countries overconsume during boom periods. More often than not, the unsustainable increases in spending are initiated by the public sector. When the boom ends, tardiness in decreasing government spending and in increasing revenues from nonbooming sectors creates fiscal deficits and monetary control problems.

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