Introduction

Commodity prices are set to decline overall in the 1990s. Biotechnology ‘is quite certainly called upon to act as a further factor reducing the overall demand for primary products from developing countries’ (OECD, 1989). The introduction of new technologies has always led to shifts in the international division of labour. New products replace old ones. New production processes make the production of specific goods cheaper in one region than in another often leading to shifts in world supply. Although it may not be as revolutionary as other new technologies (Buttel, 1989), biotechnology is no exception. It is expected to have a considerable impact on world trade.

Replacement of commodities as a result of the introduction of new technologies is not a new phenomenon. It has occurred again and again in history. Cases in point are the replacement of indigo and other pigments by colours produced petrochemically, the replacement of natural fibres (especially sisal) by synthetic fibres and the competition between natural rubber and synthetic rubber. Nevertheless the present situation may differ significantly from historical experience in that (1) switches to a new raw material base may actually take place much quicker than in the past, (2) a large number of commodities will undergo major changes in supply and demand simultaneously, and (3) alternative sources for foreign exchange earnings may be more limited now than in the past (Junne, 1987a; Junne, Komen & Tomeï, 1989). The present contribution discusses different types of substitution processes and their impact on trade.