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Exporting of Raw Materials in Third World Countries Examined

What it had done was provide those countries with a means of extracting higher income levels from their resource development during a period of strong demand for their physical resource. Thus, when demand slackened, most of these countries were not prepared to sustain the blow. As a consequence, self centered actions by some of the member countries caused serious damage to the effectiveness of the cartel.

Some OPEC countries, Saudi Arabia and Kuwait in particular, amassed so much capital in relation to their current income requirements during OPEC's heyday that they were able to (1) preserve much of the capital through investment, and (2) develop domestic processing and manufacturing capacities. When the demand for crude petroleum slackened, therefore, those countries were able to withstand the blow without serious domestic disruption. The other OPEC member countries, however, had no such buffers, and did not fare so well.

Another attempt to form a developing countries physical resource cartel never achieved OPEC like successes. In the mid 1970s, Jamaica took the lead in an attempt to form a world wide bauxite cartel. Bauxite is a clay like substance composed of hydrous aluminum oxides, and other oxides. Throughout the world, it is the primary source of aluminum used in commerce and industry.

In the 1970s, Jamaica did not have an aluminum processing capacity. What the country did have, however, were enormous deposits of both bauxite, and a relatively pure form of alumina. The bauxite deposits were approximately six times as large as were the alumina deposits.

Jamaica's bauxite and alumina resources were developed by American (four) and Canadian (one) companies. In 1974, with the recent successes of OPEC as an incentive, the Jamaican government attempted to increase the taxes paid by the American and Canadian companies engaged in bauxite and alumina mining in Jamaica. Jamaica's efforts to...

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Exporting of Raw Materials in Third World Countries Examined. (1969, December 31). In LotsofEssays.com. Retrieved 14:26, November 27, 2014, from http://www.collegetermpapers.com/viewpaper/1303587790.html
 
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