Emerging Markets After a Decade of Commodity Windfalls

EM economic and financial performance was particularly strong during the past decade. But what role did the commodity price boom of 2003-2013 actually play in determining that improved performance? And will EM fundamentals improve further if another commodity windfall is not forthcoming? Our research examined the net commodity exporters (see display below) and found that, in fact, numerous variables impacted each country’s ultimate macroeconomic performance.

While countries on the positive side of the commodity trade benefited greatly from the windfall, other factors, such as macroeconomic policy choices, were critical in determining final performance. Our analysis showed that the emerging markets can no longer be viewed as a monolith whose performance is solely driven by initial resource endowments. Rather, the performance model for projecting each EM country’s success should depend on a variety of inputs, as well as deep research on each country’s individual characteristics.

Who Are the Net Commodity Exporters?
Net Primary Commodity Exports (% of GDP, 2011)
As of December 31, 2011
Source: Haver Analytics and International Monetary Fund (IMF)


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