Working Paper 59 - The Mineral and Energy Sectors and Stages of Economic Development: A Comparative Input - Output Analysis

In this paper, an input-output framework is used for measuring thesignificance of domestic levels of mineral and energy sectors for variouseconomies at different stages of economic development. The aim is to determinethe significance of industry interconnectedness between each mineral and energysector and the rest of the economy. The rationale is that development plannersprefer sectors with extensive inter-industry ties to enclave sectors or sectorswith a few industry connections. It has been argued that the mineral sector isnothing but an enclave sector. Following a brief evaluation of the literatureconcerning the importance of mining and energy-related activities for economicdevelopment, an empirical analysis was performed employing a static inputoutputframework to measure mineral and energy sector impacts. The focus ison quantifiable linkages between the mineral and energy sectors and the rest ofthe economy. Direct, indirect and induced impacts are felt through macroeconomicmeasures such as gross national income and output. Both multipliersand linkages which capture these effects are derived. The results presentedhere emphasise the significant role of the mineral and energy sectors in economicdevelopment. Mineral and energy sectors are able to generate great industryinter-linkages and high output. Nonetheless, the opportunities for generatinggrowth prospects seem to vary with the type of mineral and energy activityundertaken as well as with the level of economic development achieved by thecountry.