The causes of erratic economic growth in primary commodity exporting countries : a theoretical approach

Abstract

Trade between nations is an important lever for promoting people's well-being. The aim of this article is to show that countries exporting raw materials and importing manufactured goods cannot achieve economic take-off. The methodology consisted in clarifying consumption, investment and government spending on local and imported goods, based on effective demand. Countries exporting raw materials and importing finished goods often have a negative Keynesian multiplier, and will not experience the sustained economic growth needed to achieve economic take-off. Their balance of payments is always in deficit, and the process of economic development is uneven. To reverse this situation, they need to process their primary products locally, where they have comparative advantages, and export their finished products.