Introduction

Why is it important to devote special attention to the issue of public ownership in a book that deals with international commodity markets? The answer is straightforward. As will be shown, state-owned enterprises have for several decades accounted for sizable shares of global supply in many commodities. There is a common belief that these enterprises behave differently from privately owned supply agents. This claim must be investigated, for, if it is true, then the analyses of how international commodity markets function, based solely on the private enterprise paradigm, could plausibly go seriously astray.

There is another reason, very important, though not equally central to the themes of the present book, for studying state enterprises in commodity production and trade. Such enterprises are particularly dominant in the developing world. A majority of them were established through nationalizations in the 1960s and 1970s, because it was believed that public ownership would speed up the economic development process. It is essential to verify whether the purported benign effects of nationalization have in fact occurred, especially since the belief has recently gained renewed popularity.

There are two important limitations to the treatment of this subject in the present chapter. First, it deals only marginally with the former socialist countries, where prior to 1990 virtually all production was in public hands as a matter of course. Until that time, therefore, there was hardly any private entrepreneurship to provide a scale of comparison with state-owned enterprise.