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Does mineral development provide a basis for sustainable economic development?

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  • Dobra, John
  • Dobra, Matt
  • Ouedraogo, Abdoulaye

Abstract

The extraction of non-renewable resources is broadly viewed as an unsustainable activity. After 60+ years of examining the role of non-renewable resource development in broader economic development, and its implications for economic welfare, there is little consensus on its effects–or even its desirability. This paper examines the issue of sustainability in the context of non-renewable mineral resources which, we argue, is entwined with the mineral extraction industry‘s “boom-bust” and “resource curse” images. We present a standard Solow-style economic growth model that integrates mineral endowment and uses the model to examine the mineral blessing or curse question empirically with a cross-section of countries. The model is tested using several econometric techniques that generally support the mineral blessing hypothesis. On the question of sustainability, we contrast the applicability of the concept in the contexts of renewable and non-renewable resource development. In the former case, the concept of sustainable yield is relatively straightforward. In the latter, the concept is much more difficult to apply. Sustainable development of non-renewable resources depends on factors beyond physical rates of production, such as governance and investment in human and physical capital.

Suggested Citation

  • Dobra, John & Dobra, Matt & Ouedraogo, Abdoulaye, 2018. "Does mineral development provide a basis for sustainable economic development?," Resources Policy, Elsevier, vol. 58(C), pages 71-76.
    • Handle: RePEc:eee:jrpoli:v:58:y:2018:i:c:p:71-76
    DOI: 10.1016/j.resourpol.2018.03.013
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    References listed on IDEAS

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    1. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    2. Stuermer, Martin, 2018. "150 Years Of Boom And Bust: What Drives Mineral Commodity Prices?," Macroeconomic Dynamics, Cambridge University Press, vol. 22(3), pages 702-717, April.
    3. Kenneth Arrow & Partha Dasgupta & Lawrence Goulder & Gretchen Daily & Paul Ehrlich & Geoffrey Heal & Simon Levin & Karl-Göran Mäler & Stephen Schneider & David Starrett & Brian Walker, 2004. "Are We Consuming Too Much?," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 147-172, Summer.
    4. John Hartwick, 1977. "Intergenerational Equity and the Investment of Rents from Exhaustible Resources in a Two Sector Model," Working Paper 281, Economics Department, Queen's University.
    5. Hodler, Roland, 2006. "The curse of natural resources in fractionalized countries," European Economic Review, Elsevier, vol. 50(6), pages 1367-1386, August.
    6. Paul Collier & Anke Hoeffler, 2005. "Resource Rents, Governance, and Conflict," Journal of Conflict Resolution, Peace Science Society (International), vol. 49(4), pages 625-633, August.
    7. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
    8. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
    9. Mikesell, Raymond F, 1997. "Explaining the resource curse, with special reference to mineral-exporting countries," Resources Policy, Elsevier, vol. 23(4), pages 191-199, December.
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    More about this item

    JEL classification:

    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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