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Trade Insights
ISSUE No. 6
MARCH 2015
Commodity Price Crash: Risks to Exports and
Economic Growth in Asia-Pacific LDCs and
LLDCs
AMAN SAGGU* AND WITADA ANUKOONWATTAKA**
Highlights
This note identifies Asia-Pacific LDCs and LLDCs1 with export-portfolios and economies
which are at greatest risk from the recent collapse in commodity prices (June 2014 to January
2015). The primary objective is to identify countries whose exports have been highly
vulnerable to the recent commodity price decline, in an effort to encourage policies which
promote export diversification, as well as to offer strategies for effectively managing revenues
in commodity-export dependent economies. Key findings:
 The Asia-Pacific region is a major source of global commodity-exports. Regional economies
account for 38% of global mineral and metal exports, as well as 29% of global fuel exports.
 There are 18 net commodity-exporters in the region, with commodity-trade surpluses
ranging from 0.11% of GDP in Myanmar to 59% of GDP in Brunei Darussalam. Export
revenues and economic growth are likely to be negatively impacted in these countries.
 Asia-Pacific LDCs and LLDCs (total of 21 nations) account for just 7% of commodityexports in the region however many have export-portfolios and economies highly reliant on
one or two commodity-exports: mainly aluminium; crude oil; copper; cotton; iron ore/steel;
and natural gas. The average share of total exports in just one commodity is 32%.
 Economic growth is at significant risk from sharp changes in commodity prices across
many Asia-Pacific LDCs and LLDCs. The most vulnerable economies include: Azerbaijan,
Kazakhstan, Mongolia and Turkmenistan, where commodity-export revenues account for
24-37% of GDP.
 Improved revenue management is the most plausible short-term strategy for insulating and
stabilizing the incomes of commodity-export dependent economies from volatile
commodity prices. In the long-term, structural reforms to build productive capacity such as
greater investment in education and infrastructure, is required to encourage export
diversification.
1
Asia-Pacific land-locked developing countries (LLDCs) include: Afghanistan, Armenia, Azerbaijan, Bhutan, Kazakhstan,
Kyrgyzstan, Lao PDR, Mongolia, Nepal, Tajikistan, Turkmenistan, and Uzbekistan.
Asia-Pacific least developed countries (LDCs) include: Afghanistan, Bangladesh, Bhutan, Cambodia, Kiribati, Lao PDR,
Myanmar, Nepal, Samoa, Solomon Islands, Timor-Leste, Tuvalu, and Vanuatu.
*Aman Saggu is a Research Assistant in the Trade and Investment Division, United Nations Economic
and Social Commission for Asia and the Pacific (asaggu26@gmail.com).
**Witada Anukoonwattaka is an Economic Affairs Officer, Trade and Investment Division, United
Nations Economic and Social Commission for Asia and the Pacific (anukoonwattaka@un.org).
Trade Insights
Issue No. 6
Introduction: the commodity price crash
International commodity prices fell sharply over the second half of 2014. Oil prices in
particular declined over 50% between June 2014 and December 20142. This has been described
as “the biggest [financial] shock for the global economy this year [2014]” (Giles, 2014) and is
likely to disrupt global trade flows in 2015. These events have substantial implications for
economies in the Asia-Pacific region – which account for around a third of global commodity
imports and exports. The impact on least developed countries (LDCs) and landlocked
developing countries (LLDCs) is of particular concern because many of these countries have
export-portfolios and economies which are highly dependent on just one or two commodity
exports. In fact, a recent paper found that across nine Asia-Pacific LDCs, 95-100% of total
export receipts were derived from just three products (see Edo and Heal, 2013). The
consequences for these countries may be substantial because it could result in: currency
depreciation; a decline in foreign exchange earnings; a fall in export revenues; growth
volatility; lower inflation; and an increase in poverty if they are dependent on employment in
commodity-related industries. These countries may also be characterized by the ‘natural
resource curse’ – a phenomenon whereby natural resource rich nations tend to experience lower
economic growth than comparable natural resource poor nations3.
The recent fall in international commodity prices (June 2014 to January 2015) extended across
all commodity sectors, including energy (50% decline), metals and minerals (16% decline) and
agriculture (7% decline). In the energy sector, oil and gas prices fell 37-54%. In the minerals
and metals markets, coal, copper, lead, tin and prices fell 12-24%, while iron ore prices plunged
47%. In the agricultural sector, corn, cotton, palm oil, and soybean prices also fell 12-26%4. To
highlight the severity of these price declines, in January 2015, the Baltic Dry Index – a measure
of global shipping costs for commodities – fell to a 28 year low (Christie, 2015). World Bank
(2015) forecasts indicate that commodity prices will continue falling in 2015. IMF (2014)
forecasts similarly expect energy prices to continue declining in 2015 however their outlook on
the performance of agricultural commodities is more mixed.
The role of commodities in Asia-Pacific economies
The overall impact of falling commodity prices on individual countries in the Asia-Pacific
region depends upon the nature of their commodity trade (i.e. net commodity-exporting or net
commodity-importing). It also depends upon the specific macro-financial conditions present in
each country, as well as the fiscal stance with regards to fuel and agricultural subsidies. In
general, for net commodity-exporting countries, a fall in commodity prices would be expected
2
Calculated using data from the Bloomberg Markets Website. ICE Brent Crude prices fell from a high of $115.71 on 19th June
2014 to $61.01 on 16th December 2014.
3
A recent UNESCAP working paper identifies three channels which could lead to a negative relationship between high levels
of natural resource and lower levels of economic growth. This includes (a) the Dutch disease – when real currency appreciation
leads to a decline in non-natural resource sectors due to lower competitiveness, (b) higher volatility in terms of trade which
may lower the overall efficiency of economic activities, and (c) competition over control of natural resources which could
weaken governance structures and result in sub-optimal spending of revenues (see Avalos, N., Stuva, V.G., Heal, A., Lida, K.,
and Okazoe, N., 2013).
4
It is important to note that the prices of some commodities actually increased. In the metals and minerals market; zinc,
aluminium and nickel prices increased due to export bans and supply side issues. In the agricultural market; orange, cocoa,
cattle and coffee prices increased due to issues relating to crop failures and the weather.
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Issue No. 6
to result in lower economic growth prospects, currency depreciation, a decline in export
revenues and a deterioration of the current account. In extreme cases, countries have attempted
to control capital outflows and currency depreciation using tighter monetary policy and foreign
exchange interventions (e.g. Russian Federation in December 2014)5.
This has substantial implications for the Asia-Pacific region, because it contains many
commodity-exporting economies – and accounts for over a quarter of global fuel and metal
exports, as well as over a third of global mineral exports (figure 1). At particular risk are
Australia (which accounts for 28% of global mineral exports) and the Russian Federation
(which accounts for 11% of global fuel exports). These two economies play a dominant role in
the exports of global commodities and are the main commodity-exporters within the region
(table 1). Due to the scale of their operations, they are likely to experience substantial declines
in export-revenues following the recent collapse in commodity prices. Outside of the AsiaPacific region, the European Union is also an important market, and although it has decreased
its share of global commodity exports, across all sectors, over the last five years, it remains the
largest exporter of agricultural products and metals in the world.
Within the Asia-Pacific region, LDCs and LLDCs (a total of 21 countries) accounted for less
than 2% of global commodity exports and 7% of Asia-Pacific commodity exports – shares
which have not changed substantially over the last five years. This suggests that these
economies are price takers in the global commodity market because they have a very low
market share. It also implies that they cannot influence global commodity prices through
supply-side restrictions.
Figure 1: Geographical structure of total world commodity exports, 2009 and 2013
90%
57% 58%
60%
50%
39% 41%
27% 26%
10%
Fuels (2013)
Fuels (2009)
Minerals (2013)
Minerals (2009)
European Union
Other Asia Pacific
22% 23%
10% 12%
0%
Rest of the World
44% 41%
13% 13%
30%
20%
41% 38%
10% 8%
40%
38% 38%
Asia Pacific LDCs & LLDCs
15% 17%
China
Agriculture (2013)
47% 48%
Agriculture (2009)
70%
26% 27%
Metals (2013)
80%
Metals (2009)
Percentage of Total World Exports (%)
100%
Source: ESCAP calculation based on Comtrade data accessed through World Integrated Trade Solution, (2015).
Notes: Product groups are defined using the HS2007 classification with mirror data. Clusters include: 2526_Minerals, 27-27_Fuels, 72-83_Metals, WTO_H3_Agrri and Total.
5
This approach should be used with caution as foreign exchange interventions are typically ineffective at curbing financial
market volatility (see Lavigne, 2008). In fact, the Russian Federation used more than $80billion of reserves to defend their
currency, yet unable to control the depreciation. Their capital outflows doubled to $151.5bilion in 2013 (Reuters, 2014).
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Issue No. 6
Table 1: Main Asia-Pacific commodity exporters (% of world trade)
Largest Exporter
2nd Largest Exporter
3rd Largest Exporter
Minerals
(28%) Australia
(3%) Indonesia
(2%) Russian Federation
Fuels
(11%) Russian Federation
(2%) Australia
(2%) Malaysia
Metals
(12%) China
(7%) Japan
(4%) Korea (Republic of)
Agriculture
(3%) China
(3%) Australia
(2%) Indonesia
Source: ESCAP calculation based on Comtrade data accessed through World Integrated Trade Solution, (2015)
Notes: Product groups are defined using the HS2007 classification with mirror data. Clusters include: 2526_Minerals, 27-27_Fuels, 72-83_Metals, WTO_H3_Agrri and Total.
The impact of falling commodity prices on the economy of a country depends on the net
commodity export position of a country in relation to the size of the economy. Across the 58
Asia-Pacific economies, 18 were in a net-export position in relation to commodities in 2013
(figure 2). This ranged from a commodity-trade surplus worth 0.11% of GDP in Myanmar to
59% of GDP in Brunei Darussalam. Export revenues and economic growth are likely to be
negatively impacted in these countries over the next year due to the recent fall in commodity
prices. On average, net commodity-exports accounted for around 14% of GDP across these 18
economies. The most impacted (above the average) economies include fuel-exporting
economies (Azerbaijan, Brunei Darussalam, Kazakhstan, the Russian Federation, and
Turkmenistan) and mineral-exporting economies (Nauru).
Figure 2: Net commodity exporters, 2013 (% of GDP)
70%
60%
50%
40%
Minerals
30%
Fuels
Metals
20%
Agriculture
Average
10%
Total
Myanmar
Armenia
New Caledonia
Papua New Guinea
Korea, Dem. Rep.
Indonesia
Timor-Leste
Iran, Islamic Rep.
Mongolia
New Zealand
Malaysia
Australia
Russian Federation
Kazakhstan
Nauru
Turkmenistan
-20%
Azerbaijan
-10%
Brunei Darussalam
0%
-30%
Source: ESCAP calculation based on Comtrade data accessed through World Integrated Trade Solution, (2015)
and the World Bank Database, (2015).
Notes: Product groups are defined using the HS2007 classification with mirror data. Clusters include: 2526_Minerals, 27-27_Fuels, 72-83_Metals, WTO_H3_Agrri and Total.
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Issue No. 6
The role of commodity exports in Asia-Pacific LDCs and LLDCs
In terms of the global commodity market, the imports and exports of Asia-Pacific LDCs and
LLDCs play a relatively minor role. Nevertheless, commodities constitute a major component
of their export portfolios. Across these economies, fuels are the largest component of total
exports (47%), followed by textiles (24%), metals and minerals (13%) and agricultural
commodities (6%). Hence commodities (fuels, metals and minerals and agricultural
commodities) account for around two thirds of total commodity exports. The composition of
these export portfolios have not changed substantially over the last five years (2009 to 2013).
Table 2: Shares of commodities in total exports
Country
Timor-Leste
Azerbaijan
Turkmenistan
Kazakhstan
Tajikistan
Bhutan
Mongolia
Uzbekistan
Armenia
Myanmar
Lao PDR
Afghanistan
Samoa
Kyrgyzstan
Solomon Islands
Vanuatu
Nepal
Cambodia
Tuvalu
Bangladesh
Kiribati
All
Commodity
Exports
99%
92%
88%
82%
80%
74%
74%
55%
45%
41%
35%
33%
21%
18%
17%
13%
12%
5%
1%
0%
0%
Largest
Commodity Export
(95%) Crude Oil
(90%) Crude Oil
(82%) Natural Gas
(66%) Crude Oil
(56%) Aluminium
(71%) Iron Ore/Steel
(31%) Coal
(20%) Natural Gas
(23%) Copper
(35%) Natural Gas
(29%) Copper
(18%) Cotton
(8%) Orange Juice
(10%) Copper
(13%) Gold
(6%) Iron Ore/Steel
(9%) Iron Ore/Steel
(3%) Rice
(1%) Aluminium
(<1%) Copper
(<1%) Copper
2nd Largest
Commodity Export
(2%) Coffee
(1%) Natural Gas
(5%) Cotton
(5%) Copper
(14%) Cotton
(2%) Copper
(25%) Copper
(18%) Cotton
(8%) Aluminium
(2%) Tin
(2%) Coffee
(8%) Coal
(6%) Iron Ore/Steel
(3%) Cotton
(4%) Palm Oil
(5%) Rice
(1%) Copper
(1%) White Sugar
(<1%) Iron Ore/Steel
(<1%) Cotton
(<1%) Iron Ore/Steel
3rd Largest
Commodity Export
(1%) Natural Gas
(<1%) Aluminium
(1%) Crude Oil
(4%) Iron Ore/Steel
(7%) Lead
(<1%) Coal
(12%) Crude Oil
(10%) Copper
(6%) Iron Ore/Steel
(1%) Copper
(1%) Gold
(6%) Iron Ore/Steel
(5%) Copper
(2%) Gold
(<1%) Cocoa
(1%) Cocoa
(1%) Aluminium
(<1%) Corn
(<1%) Copper
(<1%) Iron Ore/Steel
(<1%) Aluminium
Average
42%
(32%)
(5%)
(3%)
Source: ESCAP calculation based on Comtrade data accessed through World Integrated Trade Solution, (2015).
Notes: Product groups are defined using the HS2007 classification with mirror data. Clusters include: Aluminium
(76+2606), Copper 74+2603), Lead (78+2607), Nickel (75+2604), Tin (80+2609), Zinc (79+2608), Gold (7108),
Silver (7106+261610), Platinum (7110), Iron/ Steel (72+73), Coal (2701), Corn (1005), Wheat (1001), Soybean
(1201), Cocoa (18), Coffee (0901), White Sugar (17), Cotton (52), Orange Juice (2009), Palm Oil (1511), Cattle
(1511+0102), Lean Hogs (0203), Rice (1006), Crude Oil (2709), Gas (2705+2711) and Total Trade.
To evaluate the concentration of Asia-Pacific LDCs and LLDCs’ export portfolios in
commodities, 25 major commodity groups are defined across three sectors (metals and
minerals, fuels and agriculture). Six countries are found to be highly dependent on fuel exports:
Azerbaijan, Kazakhstan, Myanmar, Timor-Leste, Turkmenistan and Uzbekistan (table 2). Crude
oil or natural gas was the main commodity export of these countries, constituting between 35%
and 95% of total exports in 2013. In addition, five countries are found to be highly dependent
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Issue No. 6
on metal and mineral exports (Armenia, Bhutan, Lao PDR, Mongolia and Tajikistan).
Aluminium, iron ore/steel, coal and copper were the main commodity export of these countries,
constituting between 29% and 71% of all exports in 2013. Cotton was also a major component
of the export portfolio for three countries (Afghanistan, Tajikistan and Uzbekistan). The export
portfolios of around half the countries are concentrated in just one or two major commodities.
In fact, the average percentage of export portfolio in just one commodity is 32%, declining to
5% for the second largest commodity export.
Table 3: Shares of commodities in total GDP
Country
Risk
Azerbaijan
Turkmenistan
Mongolia
Kazakhstan
Lao PDR
Timor-Leste
Solomon Islands
Tajikistan
Myanmar
Vanuatu
Uzbekistan
Bhutan
Armenia
Cambodia
Kyrgyzstan
Afghanistan
Tuvalu
Samoa
Nepal
Bangladesh
Kiribati
High
High
High
High
Medium
Medium
Medium
Medium
Medium
Medium
Medium
Medium
Medium
Low
Low
Low
Low
Low
Low
Low
Low
All
Commodity
Exports
37%
26%
24%
24%
13%
11%
10%
8%
7%
6%
6%
6%
5%
3%
2%
1%
1%
1%
0%
0%
0%
Largest
Commodity Export
(36%) Crude Oil
(24%) Natural Gas
(10%) Coal
(19%) Crude Oil
(11%) Copper
(10%) Crude Oil
(7%) Gold
(5%) Aluminium
(6%) Natural Gas
(3%) Iron Ore/Steel
(2%) Natural Gas
(6%) Iron Ore/Steel
(3%) Copper
(2%) Rice
(1%) Copper
(1%) Cotton
(<1%) Aluminium
(<1%) Orange Juice
(<1%) Iron Ore/Steel
(<1%) Copper
(<1%) Copper
2nd Largest
Commodity Export
(<1%) Natural Gas
(1%) Cotton
(8%) Copper
(1%) Copper
(1%) Coffee
(<1%) Coffee
(2%) Palm Oil
(1%) Cotton
(<1%) Tin
(3%) Rice
(2%) Cotton
(<1%) Copper
(1%) Aluminium
(<1%) White Sugar
(<1%) Cotton
(<1%) Coal
(<1%) Iron Ore/Steel
(<1%) Iron Ore/Steel
(<1%) Copper
(<1%) Cotton
(<1%) Iron Ore/Steel
3rd Largest
Commodity Export
(<1%) Aluminium
(<1%) Crude Oil
(4%) Crude Oil
(1%) Iron Ore/Steel
(<1%) Gold
(<1%) Natural Gas
(<1%) Cocoa
(1%) Lead
(<1%) Crude Oil
(1%) Cocoa
(1%) Copper
(<1%) Coal
(1%) Gold
(<1%) Corn
(<1%) Gold
(<1%) Iron Ore/Steel
(<1%) Cotton
(<1%) Copper
(<1%) Aluminium
(<1%) Iron Ore/Steel
(<1%) Aluminium
Average
9%
(7%) Average
(1%) Average
(0%) Average
Source: ESCAP calculation based on Comtrade data accessed through World Integrated Trade Solution, (2015)
and the World Bank Database, (2015).
Notes: Product groups are defined using the HS2007 classification with mirror data. Clusters include: Aluminium
(76+2606), Copper 74+2603), Lead (78+2607), Nickel (75+2604), Tin (80+2609), Zinc (79+2608), Gold (7108),
Silver (7106+261610), Platinum (7110), Iron/ Steel (72+73), Coal (2701), Corn (1005), Wheat (1001), Soybean
(1201), Cocoa (18), Coffee (0901), White Sugar (17), Cotton (52), Orange Juice (2009), Palm Oil (1511), Cattle
(1511+0102), Lean Hogs (0203), Rice (1006), Crude Oil (2709), Gas (2705+2711) and Total Trade.
Asia-Pacific LDCs and LLDCs with higher levels of export-concentration in commodities are
more vulnerable to fluctuations in global commodity prices. However, the adverse effects from
a sharp decline in commodity prices are likely to be stronger in economies which have a higher
dependency on commodity-export revenues as an engine for economic growth. Using the
average shares of commodity exports in GDP and total exports of Asia-Pacific LDCs and
LLDCs as a benchmark, the most vulnerable (high-risk) group consists of: Azerbaijan,
Kazakhstan, Mongolia, and Turkmenistan (figure 3). To these economies, commodity-exports
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account for more than 74% of total exports and commodity-export revenues account for more
than 24% of GDP (table 3).
In comparison, the less vulnerable (low-risk) Asia-Pacific LDCs and LLDCs would include:
Afghanistan, Bangladesh, Cambodia, Kiribati, Kyrgyzstan, Nepal, Samoa, and Tuvalu. These
economies have relatively diversified export-structures, and although commodity exports
constitute a considerable share of total exports in some countries (e.g. 21% in Samoa and 33%
in Afghanistan), the share of commodity-exports in GDP is less than 3%, which is substantially
lower than the average of Asia-Pacific LDCs and LLDCs as a group.
Figure 3: Shares of commodities in total exports (%) and GDP (%)
40%
Azerbaijan
Share of commodities in total GDP (%)
35%
30%
Mongolia
25%
Turkmenistan
Kazakhstan
20%
15%
Lao PDR
10%
Solomon Islands
Vanuatu
5%
Timor-Leste
Average
Myanmar
Armenia
Uzbekistan
Tajikistan
Bhutan
Cambodia
Tuvalu
0%
0%
Kyrgyzstan
Nepal Samoa
20%
Afghanistan
40%
60%
80%
100%
Share of commodities in total exports (%)
Source: ESCAP calculation based on Comtrade data accessed through World Integrated Trade Solution, (2015)
and the World Bank Database, (2015).
Notes: Product groups are defined using the HS2007 classification with mirror data. Clusters include: Aluminium
(76+2606), Copper 74+2603), Lead (78+2607), Nickel (75+2604), Tin (80+2609), Zinc (79+2608), Gold (7108),
Silver (7106+261610), Platinum (7110), Iron/ Steel (72+73), Coal (2701), Corn (1005), Wheat (1001), Soybean
(1201), Cocoa (18), Coffee (0901), White Sugar (17), Cotton (52), Orange Juice (2009), Palm Oil (1511), Cattle
(1511+0102), Lean Hogs (0203), Rice (1006), Crude Oil (2709), Gas (2705+2711) and Total Trade.
Other Asia-Pacific (medium-risk) LDCs and LLDCs are found to be deviating around the
mean. They range from countries with very high levels of commodity-export concentration (i.e.
Timor-Leste) to countries with relatively diversified commodity-export structures (i.e.
Vanuatu). Commodity-export revenues across these economies range from 5% to 13% of GDP.
Economic growth in these nations may be moderately affected by changes in global commodity
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Issue No. 6
prices. However, countries of the same risk category may also experience substantial variation
in the export-performance due to differences in export composition. For example, Tajikistan is
likely to be less negatively affected by the fall in commodity prices because its main
commodity export is Aluminium – a metal whose price has not substantially fallen over the last
year.
Conclusion
At the national level, the most efficacious long-term strategy for managing commodity-export
dependent nations is to reduce exposure to a few commodities by adopting policies which favor
economic diversification6. The low levels of product diversification and high reliance of some
Asia-Pacific LDCs and LLDCs on a few commodities can lead to volatile revenue streams, and
policies are required to stabilize incomes. High-levels of commodity-export concentration also
leave export-revenues and economies highly vulnerable to exogenous shocks, such as volatile
commodity prices, and sharp changes in demand and supply. As the demand for commodities
tends to be highly inelastic, the recent commodity price decline is likely to translate in to lower
revenues and downward revisions in economic growth across net commodity-exporters and
economies where export-revenues account for a larger share of GDP.


In the short-run, revenue management is the most plausible strategy for insulating and
stabilizing the incomes of commodity-export dependent nations from volatile
commodity prices7. It involves the development of a baseline revenue measure which
represents a sustainable level of commodity production and revenue streams. A fund is
then established to channel profits in excess of the baseline during commodity price
booms, and these funds are repatriated during periods of low-commodity prices. To
prevent political opportunism, the fund is separated from government budgets. This
mechanisms stabilizes the revenue streams of governments however does not insulate
commodity-producers from price volatility. The fund can also be used to finance
diversification initiatives (see Box 1).
In the long-run, structural reforms to encourage export diversification are necessary.
Improved national infrastructure; further investment in human capital; greater
transparency of government activities and expenditure; prudential macroeconomic
management; and trade and investment liberalization measures can encourage
companies to diversify both vertically (expanding production into upstream and
downstream activities along the value chain through ) and horizontally (developing or
acquiring new products different from core business). The Vietnamese government for
example adopted a gradualist approach towards trade and investment liberalization.
Since 1986, their structural reforms included price liberalization for agricultural
commodities and a loosening of restrictions on foreign investment. The government
also made a substantial investment in infrastructure, amounting to around 10% of GDP
between 2001 and 2010 (Kien and Heo, 2009). These factors contributed to higher
6
Diversification does not imply industrialisation.
Previous studies have also proposed supply management strategies, demand management approaches, use of derivative
markets, and compensatory finance schemes (see UNDP, 2011).
7
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levels of foreign direct investment and encouraged diversification of the economy away
from textiles and garments towards footwear and electronics (Nguyen, 2010).
Box 1. Chilean copper stabilization fund
The Copper Stabilization Fund was established in 1986 to reduce the impact of copper price volatility on the
copper-export dependent economy of Chile. The fund received 0.2-0.5% of GDP, depending on the size of the
budget surplus each year. In 2006, a one-off sum of $600 million United States dollars was added to the fund. The
fund was replaced with the Economic and Social Stabilization Fund in 2007. The new fund received fiscal
surpluses in excess of 1% of GDP. The fund was invested in highly liquid and low-risk assets such as commercial
paper. At the onset of the 2007-2009 global financial crisis, when copper prices sharply declined, the fund was
used to support social, housing, pension and medical programmes. Similar revenue management systems could be
used to insulate the high-risk commodity-export dependent Asia-Pacific LLDCs and LLDCs identified in this
study, from volatile commodity prices. The drawback is that these schemes should be implemented during a period
of higher commodity prices.
Source: Gladstone (1985).
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10
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