Economic Prospects of Primary Products

Economists have long been at odds with one another on what the future holds for primary products. Disagreements run deep and the stakes are important as may be seen from the recommendations for economic development. One school of thought is firmly of the belief that the prospects for primary products are bleak and that the production of these products is likely to be poor business. This group sees the market ahead as unfavourable not only because the prices of these products usually fluctuate widely but also because, in their view, the demand for these products is of slow and uneven growth and their supply prices tend to fall relative to the prices of intermediate and finished goods. Moreover, the expansion of production of primary products is not conducive to economic development. It is, therefore, deemed to be unwise for a country to stake its economic future on this class of products. There are other economists, one can hardly call them a school, who believe that primary products are in a strong and strategic position because of widespread industrialization and because of the upsurge in population growth now under way. Industrialization requires vast additional quantities of raw materials and much more food is needed to feed the growing population and to provide improved diets as incomes rise.