By Bingxun Seng and Dr. Fraser Thompson
Asia is blessed with sizeable endowments of mining resources, amounting to some of the highest global reserves of coal, gold, manganese, uranium and iron. Almost 60 percent of the word’s coal reserves are found in Asia, particularly in the Central Asian republics, China and Indonesia.
An abundance of natural resources can be both a blessing and a curse. Economies often experience a production and export boom following the discovery of rich oil, gas or mineral deposits. However, the gains from unearthing these resources can be difficult to sustain over the longer term, which has led to the coining of the term ‘the resource curse’ in the economic literature.
But what are the implications of resource riches for broader socio-economic progress in countries? New research by the International Council of Mining and Metals (ICMM) has examined the socio-economic impacts in mining-dependent countries globally.
Its main finding: being endowed with natural resources is not inevitably a curse, particularly when examined through the socio-economic lens. The majority of resource-dependent countries from Africa to Asia have made substantial social progress over the past 20 years, raising the quality of life for people in these areas significantly.
The report, titled , examines trends across a broad set of socioeconomic indicators linked to 11 of United Nations’ Sustainable Development Goals (SDGs) in countries with a sustained history of mineral dependence over the past 20 years.
Five countries in Asia, namely Australia, Kazakhstan, Mongolia, Papua New Guinea and Uzbekistan, meet the strict criterion applied to characterise mining dependency in this report. In practice, a number of other countries in the continent are increasingly tapping into their sizeable reserves or have a heavy focus on mining in a few subnational regions. Hence, it is instructive for stakeholders in these countries to understand the lessons from other resource rich countries in translating resource wealth into socio-economic development.
Asia’s mining-dependent countries have been made substantial social progress over the past two decades. Between 1995 and 2015, more than 70 per cent of the 32 socio-economic indicators examined improved in absolute terms in Asia, led by significant development in reduction of overall income inequality, better access to the internet and mobile phones, and improved health.
|The number of RDCs has increased by over 50% since 1995|
|Over 90% of MDCs had per capita incomes below the global average in 1995. While a large number are catching up, the degree of catch up is quite slow. ©ICMM|
Governance, however, is an area of concern. Measures of corruption deteriorated in Mongolia, Papua New Guinea and Uzbekistan, while political stability weakened in Australia and Mongolia over the last 20 years, which could introduce difficult questions on the potential link between resource abundance and weak governance.
While the absolute performance on socioeconomic indicators has been promising, the relative performance of Asia’s mining-dependent countries has also been favourable.
In 1995, Papua New Guinea and Mongolia had overall socio-economic performances that were below the global average, but both were able to close the gap against the global best performers by around 5 and 10 per cent respectively over the next two decades. In fact, all mining-dependent countries in Asia narrowed the gap against the global best performers which amounted to an overall catch up of about 7 per cent.
Some of the largest relative improvements have been in areas such as access to clean energy, ICT infrastructure and access to financial institutions. Conversely, governance metrics in Asia worsened relative to best-performing countries, consistent with the decline in absolute measure.
What is not clear from these cross-country comparisons is the importance of the mining sector in driving these overall results. Many factors, ranging from urbanisation through to government reforms, influence these socio-economic indicators, so isolating the role of the mining sector can be difficult.
To shed further light on the role of mining, ICMM analysed the socio-economic performance of subnational regions in selected countries, based on their relative economic dependence on mining. The findings reveal that social progress in mining-dependent countries is also visible at the regional level, where at least three-quarters of the socio-economic metrics analysed advanced in absolute terms.
The findings in this report have several potential implications for policymakers and resource companies in Asia.
The research clearly demonstrates that a resource curse is not an inevitable consequence of mineral wealth and that most mining-dependant countries have experienced significant social progress over the two decades before the UN introduced the SDGs.
The analysis also suggests that there could be an important role for resource companies and governments to cooperate in promoting socio-economic progress.
Performance gaps highlighted by this research could be a basis for resource companies, governments, communities and civil society to think about new ways of engaging and supporting mining-dependent regions to improve the overall welfare of host populations.
Areas of subpar performance, such as governance and improved access to clean water and sanitation, could be useful places to start. A resource curse is not necessarily destiny. Thoughtful partnerships between government and resource companies could ensure that Asia’s mining-dependent countries see their rich resource endowments driving long-term sustainable development.
Bingxun Seng is a consultant with AlphaBeta and Dr. Fraser Thompson is a Director with AlphaBeta. AlphaBeta supported the International Council on Mining Metals (ICMM) in the development of the Social Progress in Mining-dependent Countries report.