International Economic Effects of Natural Rubber Price Shocks

The problem:

Natural rubber is one of the four industrial raw materials, the other three are steel, coal and oil. As an important industrial raw materials, its’ price, supply and demand conditions for the development of the national industrial policy, and have a great impact on import and export, the study of relationship of natural rubber market price fluctuations associated with the GDP has a certain value.

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Growing restricted by geographical factors, the main production of natural rubber land is near the equator. (Allen, Kirkham, Padget& Price, 1971) From a global perspective, the characteristics of the flow of natural rubber is flowing from the equator around the world, especially North America, Asia, Western Europe. On industry structure, consumption of natural rubber is the largest automobile industry, because the development of the automobile industry led to advances in tire manufacturing. Therefore, the development of the automotive industry is directly related to the production of tires, thus affecting global prices of natural rubber.