By Deepak Nayyar
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Additional resources for Economic Relations between Socialist Countries and the Third World
In the same way the proportion of total export earnings based directly on the cotton, coffee and sisal markets is 57 per cent in 1973 when sisal twine sales are included. This compares with the 58 per cent share of these three commodities in 1960. It should be noted that such an argument does not deny that the extension into processing activities is a significant development, but in terms of the diversification of commodity trade to reduce the risks of international market fluctuation, little seems to have been achieved.
The fact that some writers lament the absence of such flexibility is praiseworthy, 5 but it does not help make it any more likely or plausible. In reality it is often the case that for individual small or medium sized underdeveloped economies, 22 Socialist Countries and the Third World absolute advantage takes precedence over its comparative variant. This occurs because the capacity constraints, which must be reached if the developed trading partner is to be forced into the either-or choice which will lead him to abandon production of goods in which he has the smallest absolute advantage, are not often operative.
Year to year fluctuations in total foreign exchange earnings from commodity trade were naturally less pronounced, but even they ranged from a drop of 11 per cent to an increase of 26 per cent over the previous year. Little wonder that a 1964 study of trade prospects concluded that 'in this sector any estimates, however careful, are very liable to be quite far from the mark, particularly as regards performance in any particular year' . 11 Under such conditions planning becomes very difficult indeed and dependence takes on a very real meaning.