Rethinking mining as a development panacea: an analytical review
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Rethinking mining as a development panacea: an analytical review Robson Mandishekwa 1 Received: 8 June 2020 / Accepted: 3 November 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract Extant literature exists so far on the positive contribution of mining to economic growth. However, contrary views have also been found in the form of the ‘resource curse’ and mining-induced displacement literature. These opposing literature perspectives deserve attention when mining is pursued as a panacea for economic growth. Little, if any, attention has so far been made to bring these perspectives together. The current study, therefore, brought these views together and suggested the need to rethink mining as a panacea for growth. The study found that while most governments generally accept the contribution of mining to growth and, therefore, justify mining-induced displacement, this growth strategy leads to significant counter-effects like the resource curse, disturbances in economic activities and finally satisfaction with life. Further, effects like political instability have also been highlighted. Considering all these negative effects, the benefits espoused from mining activities may not obtain. Therefore, a very serious rethinking of mining as a strategy to stimulate economic growth is necessary. Keywords Mining . Economic development . Welfare . Resource curse . Development-induced displacement JEL classification O13 . O44 . Q32 . H31 . I13
Introduction Extant literature exists on the positive contribution of mining to economic growth. This view has forced politicians, especially in Africa, to take mining as a panacea for development (Adeola 2017b). Recent studies showing the contribution of mining to growth are those by McMahon and Moreira (2014), Pellegrin (2017), Walser (n.d.), Ericsson (2019) and Ericsson and Lof (2019). This strand of literature posits that economic growth is spurred by mining. For instance, minerals have been found to attract foreign direct investments (International Council on Mining and Metals, ICMM 2014; McMahon and Moreira 2014) and contribute between 60 and 90% of all foreign direct investments (FDIs) in low-income economies (ICMM 2014). ICMM (2014) also found that mining revenue is significant as a fraction of exports and national income. In terms of revenue contribution, Nalule (2020) also acknowledges that mining contributes significantly to government revenue in Africa. McMahon and Moreira (2014) also indicate
* Robson Mandishekwa [email protected]; [email protected] 1
Department of Economics, Midlands State University, Gweru, Zimbabwe
that investments in mining have outclassed most sectors as sources of FDI. Contrastingly, the resource curse hypothesis argues that mineral abundant nations do not necessarily fare better than resource-poor nations in various welfare measures (Sachs and Warner 1995; Norman 2009; McMahon and Moreira 2014; Huang-Ping et al. 2018). Again, mineral resources have been found to lead to displacements with significant
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