The Macro Management of Commodity Booms

Strong growth in China and India has led to improvements in raw-material exportingcountries' terms of trade and attracted complementary finance. The long-term challenge for thesecountries, where institutions are often fragile, is to avoid the so-called “resource curse”. Thispaper aims to provide a comparative perspective between policy choices in commodity-exportingcountries, contrasting the experiences of Africa and Latin America. First, it highlightsglobal macroeconomic links between the Asian Drivers (China and India) and these regions.Second, it discusses optimal policy responses from a macroeconomic and institutionalperspective. Third, it presents empirical evidence on macroeconomic, particularly fiscalresponses to Dutch disease and the specialisation effects caused by Asian Drivers' demand andassesses the benefits and challenges offered by the Asian Drivers from a macro perspective forboth Africa and Latin America.