Weakness in primary commodity trade among developing countries

The volume of trade among developing countries represents only a small proportion of their total foreign trade. This pattern of trade is in sharp contrast to that of the developed countries: the bulk of exports of primary commodities (other than fuels) from developed market countries, and of those from socialist countries, consists of their respective intra-trade. The pattern of primary commodity imports of developing countries is also in striking contrast to that of developed countries. Whereas the greater part of all imports of primary commodities (other than petroleum), into the developed market economies consists of their intra-trade, the intra-trade of developing countries furnishes only about one third of their total primary commodity imports (other than petroleum).

Although the intra-trade between developing countries covers a wide variety of primary commodities, it is fairly heavily concentrated, in terms of value, in a limited number of items. In 1979, for example, the value of such intra-trade accounted for only one quarter of their total merchandise exports: for non-fuel primary commodities it was about 24%; but for primary commodities, the corresponding proportion was less than one seventh. Petroleum is by far the most important single item, which in 1979 accounted for over 50% of the total intra-trade in primary commodities. Food commodities (rice, fats and oils, tea, sugar, meat, etc) account for a further 12% of the total. The fact that certain of these, such as tea and sugar, are among the more important commodity exports to developed countries would seem to indicate that some part of the present network of intra-trade among developing countries is a by-product of the main stream of trade between developing and developed countries. This is seen more clearly in the case of petroleum, where production capacity and related capital investment are stimulated by developed country demand.