Commodity Futures Exchanges and the North‐South Dialogue

Abstract

During the last decade increased attention has been given to the role commodity futures exchanges might play in international commodity policy. There have been suggestions (McKinnon, Houthakker) that national and international agencies, whose goal is the stabilization of commodity prices, should find it less costly to intervene in futures rather than spot markets. Recently, several less developed countries (LDC's) have requested assistance from the industrialized nations in increasing access to commodity exchanges located in developed areas (Conference on International Economic Cooperation). Many developing countries have also asked for help in establishing futures markets in their own countries (U.N. Committee on Trade and Development 1977). The purpose of this paper is threefold: (a) to report on LDC's participation in U.S. markets and discuss related public policy issues, (b) to explore the positive externalities that might be generated in LDC's that establish their own futures markets, and (c) to identify certain issues related to the role of futures markets in international commodity agreements. Although this latter topic is only peripherally related to the first two subjects, it is important because, at the same time we are seeing a growing interest by LDC's in using futures markets, we are also faced with proposals for international commodity agreements that combine governmental activity in futures and cash markets. Developing Countries and Commodity Markets