The super-cycle or commodity boom (between 2003 and 2014) was a period in which the prices of basic or primary products produced by the countries of Latin America and the Caribbean experienced a strong increase. East
phenomenon had several edges, both supply and demand, but was mainly fueled by the activity
China, a country that has carried forward a growth model based on investments in infrastructure,
which requires a huge consumption of raw materials to build various works such as roads, housing and networks
electric. According to Ocampo (2015), Latin American countries concentrated their exports to China in a number
reduced in commodities, mainly oil, copper, iron ore, soybeans and paper pulp, which
he became strongly vulnerable to the vagaries of that country’s economy.

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The supercycle was also fueled by the growth of trade during the last two decades, the increase in the prices of basic products and the access of Latin American countries to external financing at historically low rates. Regarding this last point, the region significantly reduced its external debt during the supercycle and also accumulated international reserves as a result of higher disposable income, which gave confidence to private capital markets in the sense that Latin America was capable of of paying their debts (Ocampo, 2015).

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The supercycle was interrupted during the great recession of 2008-2009, generated by the mortgage crisis
high risk in the United States, but the commodity sector was the first to recover. The duration
of this supercycle was greater than that of previous cycles, while the average increase in prices was also
more pronounced At the same time, there was an increase in the number of markets that simultaneously exhibited increases in
prices. The end of the high prices of basic products began between 2014 and 2015, and was again associated
to demand factors (the Chinese economy is growing at much lower rates) and supply (especially in the sector
oil). Graph II.7 shows the evolution of the commodity price indexes as a whole,
agricultural products, metals and energy. As noted, the end of the supercycle began at the end of 2014
and in all cases, except for agricultural products, in December 2015 the prices were in
the levels of 2005.

The end of the commodity supercycle represents a huge challenge for producing countries.
the region, due to its effects on its external sector and its fiscal implications. If there are no increases in the levels
production or a recovery in international prices, the exporting countries will have to face
an erosion of its level of income from exports and a consequent contraction of the income level of the
respective governments. In fact, in the first half of 2015 there was already a reduction in tax revenues
from non-renewable natural resources of more than 50% compared to those registered in the
first semester of 2012.

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A pact on the governance of non-renewable natural resources is necessary and includes ensuring the existence
of institutional mechanisms (such as stabilization funds) that guarantee that the income generated by
these resources contribute to sustainable spending and are invested in education and health, infrastructure, innovation and
technological development, that is, on a more solid basis of well-being, capacity development and innovation of
long term.