This chapter treats three themes, intended to provide a historical framework for the analysis of commodities in the rest of the book. The first theme reviews the significance of primary commodities in the overall economy at different stages of economic development. The second tracks the long-run decline in bulk transport costs, and explores the implications of this decline for the establishment of markets with a global reach for an increasing group of raw materials. The third theme focuses on the twentieth century. It demonstrates the greatly expanded role of public intervention and control, in primary commodity production and trade from the early 1930s until the late 1970s, and the subsequent retreat of government involvement in favor of market forces.

Primary commodities in the economic development process

For the purpose of the present section, I derive a definition of primary commodities from the national accounts, to equal the value of output from the primary sector, comprising agriculture (including hunting, forestry and fishing), mining and utilities. These are the activities which supply unprocessed raw materials of agricultural and mineral origin, along with fuels, electricity and potable water, for use by other sectors of the economy. An alternative and somewhat wider definition, derived from foreign trade statistics, appears to be more appropriate for most of the subject treatment in the rest of the book. It is discussed in chapter 2.

The significance of primary commodities in a national economy is reduced in the process of economic development.