Economists have long been questioning the usefulness of the traditional, highly regulatory international commodity policy. In recent years, the failure of this policy has become evident. Could price and earnings stabilisation through price risk management instruments represent a viable alternative?

While theoretical models suggest that trade is likely to increase productivity and income levels, the empirical evidence is rather mixed. For some countries, trade has a strong impact on growth, whereas for other countries there is no or even a negative linkage. We examine one likely...