Commodity dependence in Latin America: an empirical analysis

• Autor(a) principal: Iten, Dorian Orfeo
• Data de Publicação: 2021
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
• Texto Completo: https://hdl.handle.net/10438/31428
• topic: Commodity export dependence; Commodity export concentration; Natural resource curse; Emerging markets; Latin America; International trade; Trade war; Commodity price shock; Dependência de produtos primários; Concentração de exportação de produtos primários; Maldição dos recursos naturais; Mercados emergentes; América Latina; Comércio internacional; Guerra comercial; Choque de preços das mercadorias; Administração de empresas; Produtos primários; Comércio internacional; Exportação - América Latina; Mercadorias - Preços

This thesis investigates the drivers of commodity dependence in Latin American commodity-exporting countries, examines the resilience of this dependence to exogenous trade shocks, and relates these findings to the literature concerning the natural resource curse to identify developmental implications and derive policy recommendations. The analysis is conducted with a sample of seven Latin American soybean, copper, and crude oil exporting countries and data from 2000Q1 to 2019Q4. Fixed effects panel and individual country regression models are estimated to determine the most relevant drivers of commodity dependence for each commodity and country. The individual country regressions are then used to predict the impact of an exogenous trade shock on the commodity dependence variables to assess the commodities and countries’ shock sensitivities. Finally, the findings are discussed in the context of the natural resource curse literature, and policy recommendations are presented. The results indicate that the most relevant drivers of commodity dependence in Latin America are economic and fundamental demand and supply variables. Economic activity and interest rates constitute the most important single drivers of commodity export dependence across all three commodities. The findings from the trade shock predictions suggest that the export dependence of the copper and crude oil exporting countries is more exposed to an exogenous shock than the dependence variables of the soybean exporting countries. Adequate fiscal policies, structural transformation, and export diversification may be effective measures to reduce the adverse effects of commodity price shocks and volatility on the development of the investigated countries.