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China, India and the Commodity Boom: Economic and Environmental Implications for Low‐income Countries

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  • Ian Coxhead
  • Sisira Jayasuriya

Abstract

The international role of China has risen steadily for two decades – and has become even more important in the current global recession. The growing supply of labour‐intensive manufactured exports from China has been accompanied by a huge expansion in its imports both of raw materials and of skill‐intensive manufactured parts and components. This ‘offshoring’ of intermediates production by a large, labour‐abundant economy has economic and environmental implications for other developing economies. More recently, the rapid expansion of the Indian economy and trade indicates that it too will soon exert similar effects on global markets. We sketch a model showing how the growth of these developing‐country ‘giants’ generates adjustment pressures on other developing economies. We discuss in particular how differences in relative factor endowments of resource‐rich economies can produce quite different outcomes in the context of product fragmentation and expanding commodity trade. We also explore the effects on production, trade, environment and prospects for future growth in resource‐rich economies, particularly in the context of weak institutions and other market failures. We illustrate these different impacts by considering the cases of Indonesia, Malaysia and Thailand and highlight implications for growth, development and policy.

Suggested Citation

  • Ian Coxhead & Sisira Jayasuriya, 2010. "China, India and the Commodity Boom: Economic and Environmental Implications for Low‐income Countries," The World Economy, Wiley Blackwell, vol. 33(4), pages 525-551, April.
  • Handle: RePEc:bla:worlde:v:33:y:2010:i:4:p:525-551
    DOI: 10.1111/j.1467-9701.2009.01232.x
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    References listed on IDEAS

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    1. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, December.
    2. Ian Coxhead & Sisira Jayasuriya, 2003. "The Open Economy and the Environment," Books, Edward Elgar Publishing, number 2212.
    3. Haddad, Mona, 2007. "Trade integration in East Asia : the Role of China and production networks," Policy Research Working Paper Series 4160, The World Bank.
    4. Jose L. Tongzon, 2005. "ASEAN‐China Free Trade Area: A Bane or Boon for ASEAN Countries?," The World Economy, Wiley Blackwell, vol. 28(2), pages 191-210, February.
    5. Willenbockel, Dirk, 2007. "The Impact of China's Import Demand Growth on Sectoral Specialization in Brazil: A CGE Assessment," MPRA Paper 6200, University Library of Munich, Germany.
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    Cited by:

    1. World Bank & the People’s Republic of China Development Research Center of the State Council, 2013. "China 2030 : Building a Modern, Harmonious, and Creative Society," World Bank Publications - Books, The World Bank Group, number 12925, August.
    2. Aiping Zhang & Linsheng Zhong & Yong Xu & Hui Wang & Lijuan Dang, 2015. "Tourists’ Perception of Haze Pollution and the Potential Impacts on Travel: Reshaping the Features of Tourism Seasonality in Beijing, China," Sustainability, MDPI, vol. 7(3), pages 1-18, February.
    3. Prema‐chandra Athukorala, 2009. "The Rise of China and East Asian Export Performance: Is the Crowding‐Out Fear Warranted?," The World Economy, Wiley Blackwell, vol. 32(2), pages 234-266, February.
    4. Kae-Yih Tzeng & Joseph Chang Pying Shieh, 2016. "The transmission from equity markets to commodity markets in crises periods," Applied Economics, Taylor & Francis Journals, vol. 48(48), pages 4666-4689, October.
    5. Bernardina Algieri, 2014. "A roller coaster ride: an empirical investigation of the main drivers of the international wheat price," Agricultural Economics, International Association of Agricultural Economists, vol. 45(4), pages 459-475, July.
    6. Jianhong Zhang & Désirée van Gorp & Haico Ebbers, 2019. "What Determines Trade Between China And India During The Recession Of 2008–2012?," Contemporary Economic Policy, Western Economic Association International, vol. 37(2), pages 389-406, April.
    7. World Bank & P.R.C. Development Research Center of the State Council, 2012. "China 2030 : Building a Modern, Harmonious, and Creative High-Income Society [pre-publication version]," World Bank Publications - Books, The World Bank Group, number 6057, August.
    8. Penney, Kate & Melanie, Jane & Stark, Clare & Sheales, Terry, 2012. "Opportunities and challenges facing the Australian resources sector," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(2), pages 1-19.
    9. Athukorala, Prema-chandra & Yamashita, Nobuaki, 2006. "Production fragmentation and trade integration: East Asia in a global context," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 233-256, December.
    10. Sriananthakumar, Sivagowry & Narayan, Seema, 2015. "Are prolonged conflict and tension deterrents for stock market integration? The case of Sri Lanka," International Review of Economics & Finance, Elsevier, vol. 39(C), pages 504-520.
    11. Naudé, Wim & Szirmai, Adam, 2012. "The importance of manufacturing in economic development: Past, present and future perspectives," MERIT Working Papers 2012-041, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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