Abstract

Many developing countries facing fluctuating export earnings frequently embark on ambitious diversification programs aimed at reducing the concentration of their commodity offering. For most, however, the limited value of a strategy consisting of merely increasing the number of commodities exported soon becomes apparent. This study examines the potential for applying portfolio theory to select the agricultural commodities to be exported by a developing country when farmer prices are set and guaranteed by a marketing board. The major portfolio diversification problems encountered are discussed and suggestions are made regarding their solution.

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