The buffer stock implementations are going to have some effects that will be focus on the economy of the country that do these, implementation, because when a government apply the implementations, they are looking to have stable prices, for example when there is a shortage of a certain product, the price goes up because the demand increases and here the government of the country, uses the buffer stocks in order to balance the prices of the item.
By having stable prices in our economy, the foreign countries will see that here in Mexico, they have goods prices for certain products they may need, so they are going to decide to buy them to Mexico, because the prices in other countries can be higher. But there is something negative by applying buffer stocks, if the government apply it in a bad way, they wouldn’t get stable prices, and they will go up, and the countries that are investing in Mexico will see that there is not a stable economy and they may loss part on their investments when there is a shortage.
Another bad effect is that if the country has a surplus of a product, and the prices a higher, because of having a buffer stock of the same product, they receive higher profits and start spending money, and when the prices fall, the profits decrease and the government is not able to balance the prices.
What the countries like Mexico are looking by using buffer stocks is to develop itself, but the development of these countries such Mexico is extremely volatile and that’s not god. The objective of the buffer stocks is to reduce the impact of a shortage of a surplus of certain products.
No one know how the implementation of this strategy is going to benefit your economy or not, you will only know when there is a situation in which you should use your buffer stock in order to try of having stable places in the market.