Sharing the Riches of the Earth: Democratizing Natural Resource--Led Development. - Ethics & International Affairs

Sharing the Riches of the Earth: Democratizing Natural Resource--Led Development.

By Ethics & International Affairs

  • Release Date: 2004-04-01
  • Genre: Politics & Current Affairs
  • Size: 289.23 KB

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For most of the many poor countries that depend on the oil and mining industries to drive their economies, globalization has been disastrous. With few exceptions, economic liberalization and restructuring of the oil and mining sectors in these countries have been linked to lower economic growth, increased poverty, and institutional decay. (1) At first blush, this seems counterintuitive. How is it possible that natural resources like oil and gold, which have fueled empires and contributed to great wealth in places like the Persian Gulf and Houston, Texas, are actually making poor countries poorer? Since the economies of nearly half of the world's poorest countries depend on these sectors, developing a coherent answer to the question is crucial for addressing the problem of global poverty more effectively. Understanding the relationship between resource extraction and development has also become an important challenge for the United States's foreign policy, given its present efforts to rebuild Iraq's shattered economy through oil revenues. I will examine the causes and characteristics of this problem with specific reference to the resource-dependent poor countries of Ecuador, Peru, and Bolivia, and will analyze the potential of different strategies that might be proposed to remedy it, including greater transparency and, most importantly, greater public participation in resource revenue distribution decision-making. This analysis is grounded in the realization that, because revenues from natural resources (rents) accrue in most cases to elites rather than workers or landowners, the just distribution of benefits from natural resources is highly dependent on the discretion of these elites, who usually manage the revenues with little public oversight or scrutiny. Breaking elite control of these revenues by opening the revenue distribution process to greater public participation and creating empowered, informed, and engaged populations that can participate directly in revenue management decisionmaking, I will argue, is a key to increasing these industries' contribution to local economic development, poverty reduction, and distributive justice. A special degree of public participation is appropriate given the nonrenewable nature of these resources and the very serious social and environmental impacts their extraction can cause, and because those areas impacted by extraction tend to be the poorest and most marginalized. Democratizing the revenue transfer process is also an important component of transitioning countries away from dependence on an extraction-based economic model toward potentially more sustainable and equitable forms of economic activity.