Problem

Reduction in demand for primary commodities due to technological change

Other Names:
Production of synthetic substitutes for primary commodities
Competition between synthetics and primary commodities
Nature:
The demand for many primary commodities, particularly those produced by developing countries, has been seriously eroded by the evolution of man-made substitutes. Half the world requirement of rubber, for example, is now met by synthetic products. Pulp-based rayon and acetate, and petroleum-based noncellulosic fibres are rapidly increasing their share of the total fibre market, thus restricting the rate at which cotton and wool sales can be expanded. In almost every field technical advances are resulting in economies in use. Leather produced from animal hides is replaced by plastic materials produced from natural gas; aluminium is substituted for wood; the products of the chemical industry for the output of the farm and the forest. The market share of natural products is falling steadily, which has the side effect of raising world price-elasticity of demand to at or near the level of synthetic prices.
Reduces:
Scarce resources
Problem Type:
D: Detailed problems
Date of last update
15.02.1999 – 00:00 CET