Download presentation
Presentation is loading. Please wait.
Published byThomasina Walsh Modified over 8 years ago
1
Risks and Opportunities of Resource Extraction: The Resource Curse and Beyond Dashdorj Zorigt Dashdorj and Dashdorj Partners LLC Sustainable Management of the Extractive Sector in Guyana 14-15 November2012 Georgetown, Guyana
2
Story of Mongolia Successful transition to market economy and democracy over the last 20 years But by 2007 GDP per capita below USD 2000 Poverty level at 30 percent High unemployment
3
In 2009 Mining boom starts End of 2011 GDP grew by 17.3 percent – fastest growing economy globally GDP per capita USD3600 Unemployment down to 7.4 percent in first quarter of 2012 Each students gets 40-50 percent of tuition fees paid by government Each person above 60 years old gets close to USD1000 in cash through monthly and lump sum payments, government still will pay another USD350 Everyone gets a share of strategic mining assets for free GOOD?
4
Economic policies against resource curse are in place Budget stability law: mineral price determined by formula, deficit is less than 2 percent, no rapid increase in spending Stabilization fund Human development fund Development bank Thriving democracy, elections every four years
5
Paradox Results of the last election gave rise to populist parties At the crossroads in terms of the public debate on how to go forward with the mining industry. The mining boom is, paradoxically, shifting the political discourse more and more towards populist alternatives Important lesson: Political economy of mining is as much important in avoiding the resource curse as the economic policies are
6
Ingredients of political economy: Overall legal framework is always better than ad hoc negotiations on specific project Thorough debate on legal framework preceding major mining developments is necessary (“the worst quarrel is always better than the best fight”) Do not make the law hostage to neither industry nor NGOs nor lawmakers exclusively – try to make it a joint effort but provide a firm leadership and commercial ground to discussion After that put some legislative locks to ensure stability – two thirds voting rule is the best. But be aware of pressure building up – it may blow into your faces.
7
Tackle hard issues in the law, not during the negotiations State equity participation Level of taxation Local procurement an employment Growth of national companies that are able to become global flagship enterprises – Vale Local authorities and communities – their participation Mine related infrastructure and their linkage to local economy
8
Best lesson learnt from Mongolian case Despite all the difficulties most important lesson: HEALTHY TRANSPARENT DEBATE IN THE PARLIAMENT ENSURES SUCCESS OF THE PROJECT AND MINING INDUSTRY IN GENERAL
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.