The volatility of export earning of countries dependent on primary commodity exports has long been recognizeed as a key source of instability in the economic system. Unless they take strong protective measures, these countries not only experience boom-bust cycles but also tend to find themselves in debt distress and in need of additional aid when commodity prices collapse.
Developing countries that are dependent on exports of commodities with high price volatility need to establish stabilization funds and to otherwise manage their economies to reduce the extent of the boom-bust cycle, invluding by restricting borrowing during the boom phase.
