The state of commodity dependence (2024)

FAQs

The state of commodity dependence? ›

A country is considered to be commodity export dependent when more than 60 per cent of its total merchandise exports are composed of commodities.

A country is dependent on the export of commodities (or “commodity-dependent”) when its merchandise. exports are heavily concentrated on primary commodities.

Commodity dependence: When peripheral economies rely too heavily on the export of raw materials, which places them on unequal terms of exchange with more-developed countries that export higher-value goods.

It affects economic performance and exposes countries to shocks. Commodity-dependent countries often grapple with issues like slow productivity, income volatility, overvalued exchange rates, and increased economic and political instability.

Answer & Explanation. Among the options, the most accurate statement about commodity dependence is: Commodity dependent countries are vulnerable to commodity price changes.

At the national level, although the best long-term solution is economic diversification away from dependence on a narrow and volatile revenue stream, countries and producers first need some semblance of revenue (or income) stability in order to reduce overall dependence on commodities.

Commodity dependence affects economic performance and vulnerability to shocks. Countries that are heavily dependent on export commodities tend to face challenges such as low productivity, low income levels, overvalued exchange rates, and economic and social instability.

Imagine a big brother (core nation) who always takes the biggest slice of pizza (resources), leaving his little brother (periphery country) with the smaller slices. The little brother remains hungry and dependent on the big brother for food.

Unit 7 Summary

Geographers create models to show the distribution and size of cities. They identify patterns that help explain why cities grow to various sizes and how people in different cities are connected to each other. Other models help geographers analyze how cities are organized and develop.

Like all assets, commodity prices are ultimately determined by supply and demand. For example, a booming economy might lead to increased demand for oil and other energy commodities.

Which of the following best describes dependency theory? ›

Dependency theory explains how poor countries depend on rich countries. It goes further and indicates that rich countries cause dependence by destabilizing the weak countries and causing them to be in need. The rich exploit the raw materials of poor countries and lead these countries to debt for their benefit.

Foreign dependency generally fosters underdevelopment in the dependent country; a country's adoption of policies tailored to the interests of a stronger country may inhibit the weaker country's domestic growth, speed environmental destruction, or create temporary growth that precludes sustainable development and ...

Commodity-dependent countries experience more economic vulnerability, environmental degradation, and labor exploitation. Venezuela is an example of commodity-dependent country as it has long been reliant on oil revenues.

It's when countries are blessed by a huge supply of natural resources, inviting economic development exclusively based on resource extraction. This blessing can become a "curse" for the country because it may lead to sluggish economic, political, and social development. Another term for this is commodity dependence.

Some countries that have become highly dependent on one or more export commodities include Saudi Arabia (oil), Mexico (petroleum and oil products), Chile (copper), Brazil (iron ore, coffee beans, soybeans), and Nigeria (crude petroleums and gases).

Commodities are basic goods and materials that are widely used and are not meaningfully differentiated from one another. Examples of commodities include barrels of oils, bushels of wheat, or megawatt-hours of electricity.

In Marxist philosophy, the term commodity fetishism describes the economic relationships of production and exchange as being social relationships that exist among things (money and merchandise) and not as relationships that exist among people.

independent commodity production is the fact that the worker-producer is both labourer and proprietor: The relationship of the worker to the objective conditions of his labour is one of ownership: this is the natural unity of labour with its material prerequisites.

: a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (such as brand name) other than price.