How to avoid the effects of collapsing commodities? Lessons from history

Källarsalen Session 1: Paths towards sustained development in the global south: Historical lessons organized by Erik Green and Ellen Hillbom


Cristián Ducoing, Fredrik NG Andersson, Ellen Hillbom and Sara Torregrosa


This article studies the economic and social consequences of a future fossil commodity collapse, defined as a sharp decline in the value of a fossil fuels on developing economies. We approach the issue from a historical perspective, by analysing how commodity collapses in the past impacted the short- and long-run economic and social development of the main producing countries. Some countries will be more affected by the transition to a fossil-free economy than others. Economies where oil, gas and coal represent a significant share of economic activity will be severely affected – among these are several developing countries and middle-income countries such as Venezuela and Nigeria. A disorderly climate transition might lead to a sudden commodity collapse. We will identify historical episodes of commodity collapse. These episodes will then form the basis for our analysis. What constitutes a substantial loss, and during which time frame such a loss shall occur will be calibrated to the historical cases already identified in the literature to find additional cases.


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