With many developing countries economically dependent on mining, revenue distribution and international market fluctuations can have widespread and varied effects. PAGE projects in Niger (two projects, see below), Mongolia, Colombia, and Burkina Faso investigated the impact of extractive industries on their respective economies.
Investments to avoid Dutch disease
Two projects were undertaken in Niger, one to look at the labor market and economic development effects of the oil and mining sector boom, and one the public spending policies as the extractive industries develop. In both cases the researchers found that Dutch disease can be avoided through the careful implementation of government policy. Without well-targeted investment policies, the rise in mining and oil exports causes a loss of competitiveness in other sectors, stunting long-term economic growth. Well-targeted investments, however, can increase employment, household welfare, and economic development. Similarly, well-managed gold mining in Burkina Faso can help reduce poverty and increase average income. However, targeted government interventions are also needed to prevent increases in inequality and child labor associated with gold mining.
Extractive industries and national employment
In Mongolia and Colombia, booms in the coal and oil sectors, respectively, can also have positive employment effects, including encouraging a shift towards formal employment in Colombia. Mongolia, however, remains vulnerable to drops in the world price of metal ore, which would likely mean reduced employment.
This article is the fifth in a series presenting general conclusions and findings drawn from PAGE projects across the globe, highlighting a list of specific themes that have emerged as particular trends from the research teams’ perspectives following the evaluation of their countries’ priority issues.
Introducing a minimum wage can improve well-being
Why youth become entrepreneurs
Supporting female entrepreneurship to reduce poverty
How migration and remittances affect welfare and employment at home
Cash transfers reduce poverty and improve well-being
Social protection for the informal sector