Commodity Prices over Two Centuries: Trends, Volatility, and Impact

Does trade raise growth rates of commodity exporters less than those of industrial goods exporters? Do industrial countries gain more from trade? Do world trade booms over the past two centuries help account for the widening gap between rich and poor countries because of some asymmetric growth impact? These old questions can now be answered with hard evidence, and the answer is yes to all three. World trade booms have always been associated with commodity price booms and thus with terms-of-trade improvements favoring the commodity exporter. But whereas commodity exporters' GDP levels increased—that is, they gained from trade—their growth rates either did not increase or increased by much less than did rates of their industrial trading partners. This survey reports these results for the period 1800–1939, but it also shows how this so-called resource curse history has changed in recent decades.