2. COMMODITIES STILL IN CRISIS? by David Sapsford and Stephan Pfaffenzeller University of Liverpool and Harry Bloch Curtin University Perth, Western Australia Presentation for Workshop in Honour of Alf Maizels, SOAS, London 19-20 th September 2008

5. Alf Maizels: Commodity Economist Alf Maizels: Commodity Economist Major Contributions Major Contributions Commodities in Crisis (1992) Commodities in Crisis (1992) Maizels (1987) Maizels (1987) Maizels (1994) Maizels (1994) Maizels, Bacon and Mavrotas (1997) Maizels, Bacon and Mavrotas (1997)

6. ANALYTICAL APPROACH ANALYTICAL APPROACH FRAMEWORK (1984) FRAMEWORK (1984) Rejection of Neo-Classical Approach Rejection of Neo-Classical Approach Central Emphasis: Market Power Central Emphasis: Market Power Bargaining strengths of TNCs relative to host country governments and firms Bargaining strengths of TNCs relative to host country governments and firms Viable Policy always firmly centre-stage Viable Policy always firmly centre-stage Saw theory as servant of reality rather than vice versa! Saw theory as servant of reality rather than vice versa! Forever conscious of the realities of the world we actually live in Forever conscious of the realities of the world we actually live in

7. COMMODITIES IN CRISIS: PRICE COLLAPSE OF THE 1980s COMMODITIES IN CRISIS: PRICE COLLAPSE OF THE 1980s 1980s Experience versus 1970s and 1930s 1980s Experience versus 1970s and 1930s Statistical Awareness! (AER, 1968) Statistical Awareness! (AER, 1968) Time-series issues Time-series issues Trend versus short-term price instabilities Trend versus short-term price instabilities Cycles of varying wave-lengths Cycles of varying wave-lengths Long versus short waves Long versus short waves Aggregation issues Aggregation issues

13. CRISIS HYPOTHESIS RECONSIDERED: SAMPLE SELECTION CRISIS HYPOTHESIS RECONSIDERED: SAMPLE SELECTION Maizels (1992) – All Commodities Maizels (1992) – All Commodities Maizels (1994) – Food, Tropical Beverages, Vegetable Oilseeds & Oil, Minerals Ores and Metals Maizels (1994) – Food, Tropical Beverages, Vegetable Oilseeds & Oil, Minerals Ores and Metals Maizels, Bacon and Mavrotas (1997) – Cocoa, Coffee and Tea Maizels, Bacon and Mavrotas (1997) – Cocoa, Coffee and Tea

14. CRISIS HYPOTHESIS RECONSIDERED: ANALYSIS CRISIS HYPOTHESIS RECONSIDERED: ANALYSIS Some Econometric Issues Some Econometric Issues Trend (and Instability) Trend (and Instability) Estimation Procedures Estimation Procedures Post-Sample Evidence Post-Sample Evidence Structural Breaks, Dummy Variables and Year (n-1) Structural Breaks, Dummy Variables and Year (n-1)

15. THE EVIDENCE THE EVIDENCE Interpretation Interpretation China China Other Evidence Other Evidence Country-specific evidence Country-specific evidence Pre-1900 Evidence Pre-1900 Evidence

16. CONCLUSION CONCLUSION

17. Thank you for your attentionThank you for your attention