Raw Materials - A natural of semifinished god that is used in manufacturing or processing to make some other good. Bauxite is
the raw materials (ore) from which aluminum is made; aluminum is turn can be the raw material from which household utensils are manufactured.
†There is another definitions from the subject area of raw materials† distinct from the above mentioned:†††
†Raw materials are products immediately extracted from nature which have undergone a
first processing through which they have become marketable and, consequently, a tradable commodity. Raw materials include all energy raw materials (crude oil,
natural gas, coal, uranium), metals, semi-metals and industrial minerals (kaolin, graphite, sulfur, salts, phosphates), rocks, water as well as all
plant and animal products, whether they come from tropical regions (coffee, jute, tropical timber) or from temperate latitudes (wheat, meat, wool,
†Raw material economy: It comprises all activities which are part of the planned
handling of raw materials, i.e. explanation, evaluation, extraction, conversion into a tradable product, trade and forecasting. "Planned" here means
economically useful, ecologically and socially responsible activities.
†Resources are all natural material systems which as such are no commodities, but the intactness of which is a basic prerequisite for the
continued existence of the earth's chemical and physical equilibrium and, consequently, for the survival of mankind. Resources include: the ozone
balance, the CO2 balance, the equilibrium of sea water, the tropical forest, the krill and fish population, etc.
†World resource balances are the planned (i.e. ecologically useful and socially
responsible) handling of resources. This comprises: the explanation, evaluation, risk assessment and forecasting regarding world resources.
Current research emphasis 
†international raw material balances
†supply problems of the industrial countries
†location disadvantages of the developing countries
†dumping problems in international raw material trade
†recycling as a source for raw materials
†raw material deposits and connected environmental problems in east Siberia (addendum 1)
†structural questions and environmental problems of the Polish energy and metal economy
I. Trade intermediates and natural resources
Once international trade in more than final consumer goods is allowed, basic notions of comparative advantage need to be
re-examined. We have already discussed the limitations in a multi-commodity word of comparing autarky prices in two countries to predict item-by-item the
pattern of trade; generally only correlations can be made except under additional assumptions. With trade in intermediates allowed, the problems in
predicting trade in final goods became even greater. As MakKenzie (1945) remarked in one of his classic problem on the Ricardian model, the familiar
nineteenth century trade pattern in which Lancashire produced and† exported cotton textiles would most probably
not have been observed if England† had had to grow its own cotton . We shall
have occasion both in this section and to revert to this theme: the pattern of trade in final goods may not be readily deducible from the comparison of
pre-trade relative prices in these markets.††††
I.I Middle products (intermediates)
The phrase ďmiddle-productsĒ was used by Sanyal and Jones (1982) to encompass what traditionally are referred to as
intermediate goods, goods-in-process, and natural resources which have been extracted and prepared for trade on world markets. The core concept in their
model is that of a productive spectrum whereby, at initial stages, natural resources and raw materials are processed and, in the final stages,
goods-in-process and intermediate products are locally assembled for national consumption. International trade, according to this view, takes place in
commodities, somewhere in the ďmiddleĒ of this productive spectrum, freeing up a nationís input requirements in the final stages of production from its output
tradeable middle products at earlier stages.
Such a view of the role of international trade suggests a natural division between that part of the economy which produces
commodities (middle products) for the world market (including the local economy), called the Input Tier, and that section of the economy which makes
use of internationally traded middle products as input along with local resources to produce none-trade goods for final consumption (the Output Tier).
Ruled out by assumption in the simple version on this model is the notion that the ďmiddleĒ stages of the productive spectrum might be ďthickĒ in the sense
that tradeable middle products might use other tradeable middle products as inputs. In addition, in production structure in each tier of the economy as assumed
to resemble that of the specific-factors model. Labor is mobile both among sectors in each tier and between tiers. The balance of payments provides an
additional link between the two tiers; if the trade account is balanced, the value of total output from the Input Tier of the economy is matched by the
value of middle products used as inputs (along with labour) in the Output Tier.
Several types of questions have been raised in the context on this model, and of central concern in each case is the allocation
of labour between tiers and the real wage. Fore example, a transfer payment which gives rise to a trade surplus requires labour to be reallocated to the
Input Tier† as consumption falls, and this serves unambiguously to reduce the real wage.
† If domestic (and world) prices of trade middle products remain constant to the small
country, all non-labour inputs in the Output Tier can be aggregated, a la Hicks, into a composite middle product input, which serves to convert the
production structure in the Output Tier from an (n+1)-factor, n-commodity specific-factors model into a two-factors, many-commodity Heckscher-Ohlin
In the middle-products model Input Tier is the existence of a world market in which middle products can be exchanged for each
other that permits such a conversion.
†† The middle-products model allows countries and sectors to differ in the extent to
which local value must be added to transform middle products into final commodities,† and†
much† depends† upon† this† comparison.† It† does†† not,† however, focus upon another question: in
à† vertical production† structure with† many stages, which goods-in-process† or middle† products
does† à country† import and† which does it† export?† Two† recent† papers† have† tackled† this† issue independently† and with different† models. Sanyal† (1980)
assumes† that in† each of† two countries† à commodity is produced in à continuum of stages, with† different Ricardian†
labor-only input structures. Depending upon technological differences and† relative country† size, à cut-off point† will be†
determined, with† one country† producing the† commodity from raw material stage to some intermediate† point, and† then exporting† this good-in-process †to† the† other†
country† where labor† is applied† to finish† the production process.† By† contrast,† Dixit and† Grossman (1982)† use à†
specific-factors model, with† one† of† the† commodities (manufacturing)† produced in† à continuum† of stages using capital and labor (the other sector using land
and† labor) . These† stages are arranged† such†
that,† as† goods-in-process† develop towards† the final† stage, more labor-intensive techniques are required.† Thus with† two countries,† the labor-abundant country will tend to specialize in later stages
of the productive spectrum.
They analyze how† endowment changes† alter the† cut-off point,† as well† as investigating issues related to content protection.
I.II Natural resources
As Chapter 8 in this volume discusses,† the normative† question of† pricing natural resources (exhaustible or renewable) has received much attention
in† the literature of the past† decade. The† middle-products approach† stresses that† some activities,
the extraction of natural resources, must take place locally although international trade then allows other countries† access to† these
resources.† Obviously, comparative advantage changes† over time† for countries† engaged in† exporting
exhaustible resource. In† early work† Vanek (1963)† traced through† the changing† pattern of
United States trade in natural resources, and suggested that asymmetries in resource use and availability could account for the Leontief paradox. In
à context of multi-level trade, the costs of recourse extraction† in one† country often depend on the availability of foreign capital. Kemp and
Ohyama (1978) have† presented† à† simple† model† of† North† -† South† trade in† which South† makes use of† Northern† capital† to†
develop† its† resources† and† exports† these resources† to the North† where† they† are† used† to†
produce† final† commodities. They put† their model to use in† exploring the† normative issue† of
different† degrees of† bargaining strength and ability to exploit via export taxes and tariffs in† the
two† regions. But† the model also† stresses† the involvement† of capital† flows in† resource extraction.† Schmitz and
Helmberger† (1979)† argue† strongly† for† complementarity† between† trade† in† resources and trade in capital, à point also stressed† by Williams†
in his† 1929 article.† We turn to† consider† more† generally, now,† the interaction† between
trade† in goods† and trade in factors.
Siberia is Among Leaders in Raw Materials Markets
Siberia's rating looks more impressive in some groups of goods than its 7-th general placing. Split the whole flow of
commercial projects into 9 groups of goods, and for 6 of them Siberia joins the leading three:
Timber and Paper
I†††††† Siberia†††††††† 32.6
II††††† Moscow††††††††† 19.1
III†††† St.-Petersburg† 14.2
I†††††† Siberia†††††††† 20.3
II††††† Urals†††††††††† 13.2
III†††† Moscow††††††††† 12.3
I†††††† Moscow††††††††† 17.2
II††††† Siberia†††††††† 15.7
III†††† St.-Petersburg† 11.9
I†††††† Moscow††††††††† 22.0
II††††† Siberia†††††††† 14.1
III†††† Urals†††††††††† 5.6
I†††††† Moscow††††††††† 23.6
II††††† Siberia†††††††† 12.4
III†††† Volga†††††††††† 12.1
I†††††† St.-Petersburg† 20.9
II††††† Urals†††††††††† 19.6
III†††† Siberia†††††††† 11.7
ďThe New Polgrave a dictionary of economicĒ Editor: J.Eatwell, M.Mmilgate P.Newman
Chair of Raw Material Economy and World Resource Balances Prof. Dr.rer.nat. E. Machens (temporary appointment)
ďPositive Theory of International TradeĒ Editor: R.W. Jones, J.P. Neary (pages 31-37)
ďThe World Economy† History & ProspectĒ Editor: W.W Rostow (part 52 ďThe Future
of the World EconomyĒ , pages 610-618)
ďSiberia is Among Leaders in Raw Materials MarketsĒEditors: Alexei Alexeev, Andrey Kiselev
 In Jones (1980) a two-country
Recardian model is illustrated in which one commodity requires an intermediate input and technologies differ between countries The pattern of trade can be
reversed as a result of variations in the price of the traded intermediate.††††
 Both papers cite the use of the
continuum concept† in Dornbusch,† Fischer, and† Samuelson (1977).
 À limitation of both papers
is the assumption that costs (or† factor proportions)† move monotonically from lower to higher stages of production. If not, trade may take place à1
many points† in the productive spectrum in the absence of inhibiting transport costs.
 This model is described in
simplified terms by Findlay (1979).