The forgotten resource curse: South Africa's poor experience with mineral extraction

Studies of the resource curse as it affects African states abound, yet few deal specifically with the experiences of South Africa. The inability of countries to convert natural resource wealth into income and improved development measures remains highly pertinent and is especially apparent in Africa's largest economy. This paper takes a unique approach to study the resource curse by comparing South Africa's political economy with the existing resource curse literature. Using data from international organisations, studies of poverty and qualitative evidence this paper examines South Africa's experience with mineral extraction. It is found that South Africa has experienced many of the symptoms outlined in the resource curse literature including relatively slow GDP growth, gross inequalities, entrenched poverty and the creation of a rentier state. Overall, it is concluded that South Africa has failed to benefit from natural resource wealth and can be classified as a resource cursed state. Not only has mineral wealth failed to benefit much of South Africa's population, sections of society have actually been harmed through the process of mineral extraction. This paper is the first to examine South Africa in light of the current resource curse literature and to conclude that the state far more closely resembles its sub-Saharan African neighbours than its upper-middle income peers.     

“One thing leads to another”—Commodities,linkages and industrial development

With a particular focus on low income economies in SSA, this paper addresses the nature and determinants of linkages from the commodities sectors and challenges the received view that enclave development is an inherent characteristic of resource extraction, particularly in the hard and energy commodities sectors. It argues that there has been a steady increase in linkage development and that there are significant opportunities for deepening this process. The opportunities may be greater for backward than for forward linkages, particularly in the minerals and energy sectors. In making this case, this Discussion Paper draws on the experience of high income countries which have resource intensive economic structures, the geographical specificity of many resources and the growing interest of large resource extracting firms in outsourcing the production of inputs which are outside of their core competences and in supporting local production of some inputs, it sets out a general model of linkage development which distinguishes between win–win and win–lose outcomes.     

Natural resources and 'gradual' reform in Uzbekistan and Turkmenistan

Among low‐income transition reformers, natural resource rents are an important initial condition that helps explain choice of reform strategy. Resource‐rich Uzbekistan and Turkmenistan and resource‐poor China and Vietnam all claim to pursue gradual reform, but their strategies differ. In China and Vietnam, low resource rents have nurtured developmental political conditions and encouraged efficient resource use, which initially promoted agriculture as a dynamic market sector, capable of absorbing labour from the lagging state sector. In contrast, the scale and ease of natural resource rent extraction in the Central Asian countries has consolidated authoritarian governments that postpone reform. Despite high energy rents, Uzbekistan and Turkmenistan still extract agricultural rents in ways that repress farm incentives, perpetuate environmental degradation and liquidate irrigation assets. Uzbekistan uses its rents to subsidize a manufacturing sector, that is neither dynamic nor competitive. As its dynamic sector, Turkmenistan promotes natural gas exports that depend on volatile markets. Resource‐driven development models suggest that reform is required in both countries to avert a growth collapse. Turkmenistan's large energy rent‐stream may postpone a collapse for some years, but Uzbekistan's position is already precarious: it has run down its rural infrastructure and accumulated sizeable foreign debts and will require external assistance to recover from a growth collapse. Such assistance should be made conditional on accelerated economic and political reform.     

The resource curse

Countries that possess rich mineral deposits, it is widely assumed, are fortunate. Such deposits are assets, part of a country's natural capital. Mining is the key that converts dormant mineral wealth into schools, homes, ports, and other forms of capital that directly contribute to economic development. Over the past two decades, however, a more negative view of mining has emerged that questions the positive relationship between mineral extraction and economic development. The impetus for the alternative view came from empirical studies suggesting that countries where mining is important have not grown as rapidly as other countries. More recent studies have explored the possible reasons behind the disappointing performance of many mineral producing countries. While the central point of contention between the conventional and alternative views — namely, whether or not mining usually promotes economic development — remains unresolved, there is widespread agreement that rich mineral deposits provide developing countries with opportunities, which in some instances have been used wisely to promote development, and in other instances have been misused, hurting development. The consensus on this issue is important, for it means that one uniform policy toward all mining in the developing world is not desirable, despite the recent suggestions by some to the contrary. The appropriate public policy question is not should we or should we not promote mining in the developing countries, but rather where should we encourage it and how can we ensure that it contributes as much as possible to economic development and poverty alleviation.     

Informality in mineral resource management in Asia: Raising questions relating to community economies and sustainable development

Informal mining activities provide livelihoods for millions of poor in mineral‐rich developing countries. Yet, they continue to remain one of the least understood areas in mineral resource management. While its poverty reduction potential is acknowledged, the heterogeneous forms of mining that come under its purview are not well discussed. This article aims to draw attention to the politics of definition by briefly introducing the reader to the nomenclature currently used to describe such mining activities. Then the article examines the nature of informality that justifies the name, and then illustrates the claim by documenting a range of informal mining practices in India with cited examples from other Asian countries. It illustrates the variations in social‐economic, technical and legal characteristics, by putting such mining in a community and participatory framework. Finally, the article discusses ways to move towards sustainable development with community participation in mineral‐rich areas of developing countries.     

A cointegration and causality analysis of copper consumption and economic growth in rich countries

The paper examines the copper consumption-economic growth nexus for 16 rich economies from the period 1966 to 2010. Various generations of panel unit root and cointegration tests are applied. Both series are found to be integrated of order one. Evidence of cointegration is found especially when controlling for breaks and long-run cross-sectional dependence. Causality is investigated using a vector error-correction mechanism (VECM) framework. At individual level, unidirectional causality running from economic growth to copper consumption is unraveled for Finland, France and UK in the long-run. Unidirectional causality is also found running from copper consumption to economic growth for Spain. Long-run bi-directionality between economic growth and copper consumption is found for Belgium, Greece, Italy, Japan and South Korea. The neutrality hypothesis holds for Australia, Austria, Canada, Netherlands, Portugal, Sweden and USA in the long-run. Taken as a whole, panel causality test reveals a long-run unidirectional causality running from economic growth to copper consumption.     

Is there a Dutch disease in Botswana?

The Dutch disease is regularly evoked in the resource curse literature and remains a frequent explanation for the poor economic performance found in many resource-rich countries. Given Botswana's high rate of per capita GDP growth, it might seem superfluous at first glance to ask whether or not there is a Dutch disease in Botswana. Yet, Botswana merits study here both as a significant potential exception to any posited inevitability of the Dutch disease and also because the debate on whether or not Botswana has avoided the Dutch disease is far less settled than is indicated by its economic growth record. Botswana currently suffers from many of the symptoms of the Dutch disease but not for the causal reasons posited in the Dutch disease model. Indeed, many of the explanations for the lack of diversification found in Botswana's mineral-dependent economy have nothing to do with either diamond revenues or the Dutch disease. Botswana has done about as well managing its resource wealth as could realistically be expected but it is unlikely to succeed in diversifying its economy away from diamonds anytime soon.     

The terms of trade debate and the policy implications for primary product producers

The terms of trade debate initiated by Raul Prebisch and Hans Singer over 60 years ago continues to this day and is unlikely to be resolved soon. However, even if Prebisch and Singer are right and the terms of trade of countries exporting primary products are falling, to suggest that these countries should diversify away from the production of mineral commodities and other primary products, as many have done, may be poor policy advice, encouraging countries to abandon a promising source of wealth with which to foster economic development.     

The development of first-possession rules in US mining, 1872–1920: theory, evidence, and policy implications

This paper applies a property rights framework to federal mineral lands in the western United States from the enactment of the Mining Law in 1872 until the enactment of the Mineral Leasing Act for fossil fuels in 1920. There are two principal findings. First, the Mining Law appears to have been an effective means for assigning rights to mineral stocks on public lands (at least through 1920). This conclusion is supported by evidence from claim disputes in the West. Second, the impetus for the Mineral Leasing Act did not derive from the different physical characteristics of hardrock minerals and petroleum. The relevance of these conclusions to contemporary mineral policy is also discussed.     

Informal coal mining in Eastern India: Evidence from the Raniganj Coalbelt

Unauthorized mines are not uncommon in mineral-rich regions of poorer countries, and India is no exception. Whether they constitute merely a law and order problem including safety issues, or there are important social and economic questions involved has yet to be thrashed out. The mining industry, at regional, national and international levels, is ambivalent towards such mining, tending to draw attention away from their informal nature to the size factor.
This article looks into the problem of such informal mining in the light of empirical surveys in eastern Indian collieries. These are called peoples' mines and they serve a significant purpose in local economies. The article's thesis is that peasant communities are trying to claim back a portion of the local resources lost to them through appropriation by mining companies thus re-asserting their traditional rights to local mineral resources. In conclusion, the need for a new moral economy for mining regions is stressed: an economy in which local communities will play a powerful role.     

Can Species Have Capabilities,and What if They Can?

In this article, I apply the environmental or expanded capabilities approach to species and examine whether species as wholes can have capabilities and what are the implications if they can. The examination provides support for the claim that species as evolutionary groups can possess capabilities. They have integrity, which refers to the functionings that enable the self-making and development (evolvement) of species, and it is conceptually possible to identify capabilities that essentially enable or contribute to species integrity. One central capability for species can be identified from conservation literature: adaptive capacity, the ability of species to react to environmental changes by self-regulative evolution. After constructing the main argument that species can have capabilities and that they possess the capability to adaptive capacity, I shortly expound on the implications of these claims. It turns out that there are at least three different ways to apply the notion, and that the claim ‘species have capabilities’ does not entail that species are necessarily recipients of justice.     

Marine Protected Areas in Sri Lanka: A Review

Despite the popularity of marine protected areas (MPAs) as a management tool, increasing evidence shows that many fail to achieve conservation objectives. Although several MPAs exist in Sri Lanka, most are not managed, and resource extraction and habitat degradation continue unabated. At present, the declaration and management of MPAs is carried out without adequate consideration of the ecology, socioeconomic realities, or long-term management sustainability. Managers have focused more toward the creation of new legislation and protected areas rather than ensuring the implementation of existing regulations and management of existing protected areas. Poor coordination and a lack of serious political will have also hindered successful resource management. As in other developing countries, MPA managers have to contend with coastal communities that are directly dependant on marine resources for their subsistence. This often makes it unfeasible to exclude resource users, and MPAs have failed to attract necessary government support because many politicians are partial toward the immediate needs of local communities for both economic and political reasons. A more integrated approach, and decisions based on the analysis of all relevant criteria combined with a concerted and genuine effort toward implementing strategies and achieving predetermined targets, is needed for effective management of MPAs and the sustainable use of marine resources in Sri Lanka.     

Linkages in Ghana's gold mining industry: Challenging the enclave thesis

By 2009, Ghana was the second-ranked African producer after South Africa, and had become the world's ninth largest producer of gold, at some 3.8% of global production, up from 2.6% five years earlier. Gold production volumes and revenues rose significantly over the decade from 2000. Yet gold mining tends to be perceived negatively in Ghana, and is seen as providing far less than it should in terms of public revenue, employment, skills development and spillovers, and localised economic development. Gold mining is often depicted as having an enclave status, disconnected and isolated from the rest of the economy. In contrast, the research findings here demonstrate that after a period of strong investment and growth, gold mining can no longer be viewed as an enclave activity: it is in fact more deeply linked into the Ghanaian economy than hitherto understood, through a set of as yet under-researched but promising economic linkages, notably backward linkages, which can potentially be strengthened by policy and support measures.     

Sensitivity Analysis of Aggregated Indices for Integrated Assessment with a Case Study of the Mid-Atlantic Region

Environmental indicators are often aggregated into a single index for various purposes in environmental studies. Aggregated indices derived from the same data set can differ, usually because the aggregated indices' sensitivities are not thoroughly analyzed. Furthermore, if a sensitivity analysis is carried out, it is not presented in a transparent fashion to policy decision-makers. This paper presents a method of generating various aggregated environmental indices and analyzing their sensitivities via the use of the fuzzy set concept. Results show that several insights into the environmental conditions of the study area (e.g., the distribution of good or bad values of indicators at a watershed and or across the region) can be revealed in the sensitivity analysis of aggregated indices.     

A dangerous bet: The challenges of formalizing artisanal mining in the Democratic Republic of Congo

Among policy-makers and governments, there is a broad consensus that artisanal and small-scale mining (ASM) needs to be ‘formalized’ – embodied in a standardized legal framework that is registered in and governed by a central state system-, the basic condition being that artisanal miners are given formal property rights. This article aims to contribute to this discussion, drawing on a case study from the Eastern Democratic Republic of Congo (DRC), where it is estimated that up to 90 percent of mineral production and export is ‘informal’. After having pointed out some of the theoretical assumptions behind the formalization canon, we study the challenges of formalizing the mining sector in the DRC. Next, we provide an in-depth analysis of one concrete policy measure of the Congolese government, the temporary ban on all artisanal activities. We argue that the mining ban was not only a radical example of a top-down formalization policy, but also an illustration of a bureaucratic and technical measure that compounds but does not address different problems associated with ASM: conflict, informality, poverty, illegality, state control. Looking at the empirical evidence from the DRC, we argue that these kinds of technical solutions can never address the broader socio-economic and political issues at stake.     

碳税的三重效应分析——碳税政策实施效应的比较

碳税是一种重要的环境经济手段,其设立初衷是将环境成本内部化,减少化石能源的消费和碳排放量。20世纪90年代以来,许多国家和地区探索实施了碳税。但作为一个干预经济运行的政策手段,碳税不仅会产生环境效应,还会产生经济效应和分配效应。这些效应互相影响,最终效果存在较大的不确定性:碳税的引入会在本国或本地区带来碳排放量的一定程度下降,但也可能引起"碳泄漏"。同时,由于碳税干扰了能源价格,可能加大能源成本,对工业生产竞争力,以及居民福利、就业等产生影响。既利用碳税实现碳减排,又要避免碳税对市场的扭曲,影响经济目标的实现,还要避免对贫困阶层的不利影响,同时达到这些目标实非易事,因此各国引入碳税前大多非常谨慎。特别是近几年,全球经济持续低迷,各国正设法推动制造业发展以提振经济走出疲软态势,对征收碳税的积极性有所下降。我国是一个发展中国家,正处于经济结构转型、多项重要改革同时推进的艰难转型期,在当前世界经济增长放缓的大背景下,保增长促就业的任务也很重,考虑到碳税三种效应的复杂性和不确定性,建议我国开征碳税应非常慎重。     

Capitalizing on energy supply: Western China's opportunity for development

Two kinds of disparities pervade China and threaten its well-being. The first, regional disparities focus on levels of economic development, which vary considerably across China. The second is largely a corollary of the first, referring to mismatch in energy supply and demand, with some places suffering severe shortages while others are blessed with significant surpluses. Western China enjoys the dubious distinction of recording the country's lowest levels of economic development while, paradoxically, being blessed with plentiful reserves of energy and non-energy minerals. Turning those surplus resources to good account through transferring them to minerals and energy-hungry Eastern China is seen by policy-makers as something of a panacea. Not only will such a strategy significantly boost Western China's economic prospects, but it will eliminate the resource shortages currently constraining the East's vibrant growth. The issues of regional disparities, energy mismatches and transfers of these resources are discussed, with attention given to both spatial and time perspectives. The paper concludes with a cautious endorsement of the policy initiatives that promote the strategy of mineral transfers.     

Biofuels: Efficiency,Ethics, and Limits to Human Appropriation of Ecosystem Services

Biofuels have lately been indicated as a promising source of cheap and sustainable energy. In this paper we argue that some important ethical and environmental issues have also to be addressed: (1) the conflict between biofuels production and global food security, particularly in developing countries, and (2) the limits of the Human Appropriation of ecosystem services and Net Primary Productivity. We warn that large scale conversion of crops, grasslands, natural and semi-natural ecosystem, (such as the conversion of grasslands to cellulosic ethanol production, or plantation of sugar cane and palm oil), may have detrimental social and ecological consequences. Social effects may concern: (1) food security, especially in developing countries, leading to an increase of the price of staple food, (2) transnational corporations and big landowners establishing larger and larger landholdings in conflict with indigenous areas and the subsistence of small farmers. Ecological effects may concern: (1) competition with grazing wild and domesticated animals (e.g., millions of grazing livestock in USA prairies), (2) an excessive appropriation of Net Primary Production from ecosystems, (3) threatening biodiversity preservation and soil fertility. We claim that is it well known how ecological and social issues are strictly interwoven and that large scale biofuels production, by putting high pressure on both fronts, may trigger dangerous feedbacks, also considering the critical fact that 9 billion people are expected to inhabit the planet by 2050. There is a need to conduct serious and deep analysis on the environmental and social impact of large scale biofuels production before important energy policies are launched at global level. Biofuels will not represent an energetic panacea and their role in the overall energy consumption will remain marginal in our present highly energivorous society, while their effect on food security and environment preservation may have detrimental results. We should also have the courage to face two key issues: (1) we cannot keep increasing resources consumption at present pace, and have to change our life style accordingly, and (2) we have to deal with population growth; we cannot expect to have 9–10 billions people inhabiting the earth by 2050, without this representing a major impact on its support system.     

Resource abundance and financial development: Evidence from China

In this paper, we extend the debate on the resource curse by focusing on a new mechanism. Theoretically, resource abundance may have a negative influence on financial development by impacting trade openness, the demand for financial reforms, social capital accumulation and productive investments. Using provincial panel data of China, the empirical analysis confirms such a negative link between mineral resource abundance and financial development. The resource-rich regions tend to have a slower pace of financial development than resource-poor ones. Since the positive relationship between financial development and long-run growth is also confirmed by the analysis, our findings suggest that financial development constitutes an important mechanism through which resource abundance can impact economic performance.     

Mineral wealth and the economic transition: Kazakstan

The exploitation of mineral wealth can amplify the problems of the transition economies in three basic ways. First, the rebound of the real exchange rate that characterises a successful transition may be augmented by the capital inflow required to expand mineral production. This can cause both recession in the short-run and lower growth in the medium-term. Second, when the mineral revenues expand, the Dutch Disease effects may intensify the transition-related shrinkage of the non-mining tradeable sector, thereby retarding economic diversification and rendering the economy vulnerable to external shocks. Third, a mineral boom tends to concentrate revenue on the government, which may use it to postpone difficult decisions on economic reform and/or dissipate the revenue due to weak financial markets and inadequate public accountability. Kazakstan, like oil-rich Azerbaijan, is a late reformer and displays evidence of a faster transition rebound than other less resource-rich countries in the CIS do. However, Kazakstan has two advantages over Azerbaijan. First, Kazakstan has a more diversified mineral endowment with which to counter any trend towards single commodity specialization. Second, Kazakstan is making a later start on oil expansion so that it can learn from the experience of Azerbaijan. Priorities for Kazakstan are the continuation of prudent economic policies, the creation of institutions to enhance the transparency of the revenue flows, and the use of environmental accounting to provide a rationale for the deployment of the oil rents.