The Impact of Currency Devaluation on Commodity Production and Exports of Developing Countries

Abstract

Since the sharp collapse in the world market prices of virtually the entire range of primary commodities exported from developing countries from their peak in 1979–80, a large number of these countries have faced an external financing crisis. This has been the case not only for the very poor countries which are heavily dependent on commodity exports and official aid flows for their foreign exchange availabilities, but also for the more economically advanced developing countries many of which had been heavy borrowers on the commercial banking markets, and were faced, as from 1981, with an unforeseen and unprecedented increase in interest rates on their outstanding foreign debts. The majority of such countries have been forced to reach agreements with the International Monetary Fund (IMF) as a condition for obtaining stand-by credits, and for the conclusion of agreements with commercial bank creditors for debt rescheduling.

This is an extended and updated version of papers prepared for use in the UNCTAD Trade and Development Report, 1984 and 1985.