Mineral Rents Research Articles

Sustainable food production, forest biodiversity and mineral pricing: Interconnected global issues

The food production challenges for growing population are the global issue that is highly proliferated in the United Nation Sustainable development Goal (SDG-12) with responsible consumption and production. The goal further emphasized the need to reduce global food waste at retailers, consumers, production, and supply chains level by 2030. This study is in line with the SDG-12 to analyze the relationship between sustainable food production, forest biodiversity, and mineral pricing by using world aggregated data for a period of 1970–2018. The study used different cointegrating regressions, including Fully Modified OLS (FMOLS), Dynamic OLS (DOLS), Canonical Cointegrating Regression (CCR) and ARDL-Bounds testing approach for robust inferences. The results show that forest biodiversity increases carbon emissions due to inadequate land use planning and animal rich biodiversity, while food production is merely carbon associated that supported ‘food production footprints’ at global scale. Mineral rents and energy demand both increases carbon emissions that substantiate the ‘mineral resource curse’ hypothesis and energy associated global emissions. Although the result is not supported the ‘pollution haven’ hypothesis and population associated emissions, however, there is a strong evidence of ‘race-to-the-bottom’ hypothesis at global scale. The simulation results suggested that forest biodiversity, food prices, mineral rents, population density, and combustibles and renewables waste will negatively affect the global environment in the form of high mass carbon emissions that sabotaged the United Nation sustainable development agenda. The study emphasized the need to adopt sustainable policy instruments, including advancement in the clean energy resources, cleaner production technologies, sustainable resource management, and conservation of forest biodiversity, which will be helpful to reduce carbon abatement costs at worldwide.

Exploitation of Mineral Resources and Economic Growth in CEMAC: The Role of Institutions

Purpose: The objective of our study is to determine on one hand the effect of the exploitation of mineral resources on economic growth of CEMAC member countries, and on the other hand to examine the role of institutions in the transmission of these effects. Design/methodology/approach: To achieve our goals, we formulated an econometric model in panel data concerning countries of this economic community. Using the fixed effects method and two stage least squared method over the period 2002 to 2016, a period during which we observed not only a surge in the prices of natural resources in the markets but also a fall in the prices of basic resources following two large exogenous shocks. First, the “subprime” crisis and the 2015 oil crisis. Finding: From our findings, mineral rent has a positive and significant effects on economic growth. Subsequently, when we control our model with all the variables capturing institutions of governance (Voice and responsibility, Political stability and absence of violence / terrorism, Government Effectiveness - Regulatory quality, Rule of law, and Control of corruption), the results of our regressions were robust. In effect, good governance ensures the proper distribution of mineral rent throughout the economy and contributes to economic development. We came to the conclusion that these institutions of governance do not play a role in the transmission of the positive effects of mineral rent on economic growth. Research limitations/implications: The following where limitations encountered in our study. Firstly, the temporal dimension of our study (15 years). Secondly, the failure to take into account certain institutional variables such as democracy or the type of political regime. Originality/value: Our study enriches the literature of natural resource curse; it is in line with those who have shown that abundance in basic commodities or natural resource is not necessarily a hindrance to economic development.

Rents in the political economy of colonial Angola – from the coffee boom to Cabinda Gulf

Angolan agricultural and mining capital benefited from a long-lasting boom until the mid 1950s but afterwards the world market of tropical commodities changed and agricultural capitals entered into a trend of falling profit rates.This paper tries to evaluate this fall and to describe how it was countered by public policies. In fact, during the last two decades before 1974 the colonial State implemented expenditure amounting to more than a 1 billion USD. The State expenditure was funded by the taxation of mineral rents, mainly coming from the diamond and oil sectors.The local reinvestment of mineral rents, as the recent evolution of the petro-states shows, was an exceptional historical experience. In late colonial Angola capital accumulation came to depend on an increasingly smaller number of rent-generating corporations (in fact, two) and so did the State military expenditure, which included a colonial war budget. This situation generated a political flaw: one of those corporations, Cabinda Gulf Oil, was an affiliate of the Gulf Oil Corporation and the visibility of this association led to a public campaign in the US led by a Congregationalist Church. The campaign against the presence of Gulf in Angola was obviously not successful. Still this model of rent-distributing could have hardly last in a capitalist world market and therefore it survived the United Church efforts for only one year more.

Does Oil Rent Increase Happiness? A Partial Efficiency Analysis of Selected African Countries

Purpose of the article: To investigate and ascertain the impact of oil rent on happiness in selected African countries. Methodology/methods: This study employed the trend analysis to graphically illustrate some major data. It also employed the fixed effect to analyse the model and the partial efficiency analysis to rank the countries studied in terms of their efficiency in the use of oil rent to produce happiness. Scientific aim: This study examines the relationship between oil rent, the oil price, the GDP growth, the mineral rent and happiness. Findings: The results show that oil rent does not significantly increase happiness in the countries studied with Cameroun being the happiest country in the panel. Oil prices however significantly increased happiness. The study also found that the economic growth reduces happiness. Conclusions: The study provides evidence that the economic growth alone does not lead to happiness in the country if citizens are not employed and the rate of inflation continues to spiral upward. The study thus concludes that the economic growth must be inclusive in nature through government use of rents to invest in sectors that create value additions and job opportunities for citizens. The study also recommends the setting of the social safety net, as well as ensuring that inflation is properly managed.

Exploitation of Mineral Resources and Human Capital in CEMAC

The aims of this study is to verify the effect of the exploitation of mineral resources on human capital in CEMAC countries. Our analysis made use of panel data sets of all these members countries, over the period of 2002 to 2016, which is a period where the prices of natural resources weakness frequent fluctuation in the world market. The econometric model formulated in relation to mineral rent in CEMAC countries has three indicators of human capital, measured by the rate of school enrolment, infant mortality rate and life expectancy. Three regression techniques have been used for this purpose: the ordinary least squared (OLS); two stages least squared (2SLS) and Limited Information Maximum Likelihood (LIML). The results of our analysis shows that rent from mineral resources has a negative effect on schooling rate and life expectancy rate in CEMAC. Similarly, our result demonstrates that, mineral rent increases infant mortality rate in CEMAC members countries. Keywords: Mineral rent, human capital and panel data DOI : 10.7176/JESD/10-24-05 Publication date: December 31 st 2019

The Impact of Oil Rents on Subnational Development: Evidence from Argentina

This article analyses the relation between mineral rents and development outcomes at the subnational level. The classical literature suggests that natural resource abundance has negative effects on well-being, a situation referred to as the resource curse. However, a novel strand of research emphasizes that rentier states worldwide exhibit contrasting outcomes. To account for such variation, this investigation aligns with approaches stressing the significance of contextual (place and institutional) factors to studying the resource curse. The main claim in this work is that both structural and institutional factors related to the extractive industry help account for variation in development outcomes. It contends that mineral rents are positively associated with human development and economic industrialization when the extractive sector is not geographically concentrated in enclave economies, and subnational fiscal institutions redistribute enough rents from producing to non-producing districts. It empirically tests this argument using a time series cross-sectional analysis, a difference-in-difference (DiD) estimation, and two case studies in Argentina, a country where subnational territorial units collect mineral royalties and have exogenously created their own rent-sharing regimes. It finally provides some comparative implications that may contribute to current debates on the socioeconomic impact of natural resource wealth.

Natural resources and human development: Evidence from mineral-dependent African countries using exploratory graphical analysis

In this study, we propose a new approach for the visual inspection of interactions between human development and economic growth and a set of variables that reflect the dependence of mineral resources. We focus on the ten African countries with the highest share of mineral exports compared to total exports in the period from 2007 to 2016. First, we provide a descriptive analysis and we rank the countries according to their average annual growth in relation to a set of proxies of resource dependence and economic indicators during the sample period. Second, we cluster the different states by means of a dimensionality-reduction technique that enabled synthesising the information in the rankings into two factors: (a) economic growth and human development, and (b) growth in mineral resource dependence. Finally, we project all countries into a perceptual map and observe four clusters that roughly correspond to the main African regions, and whose distribution shows a slightly negative slope (indicative of a weak inverse relationship between mineral dependence and development). Regarding the interactions among variables, we observe a tenuous negative association between average growth in human development and the relative weight of mineral rents. These results, coupled with the fact that the average growth in resource rents does not materialise in higher economic growth, indicate that corruption may be impeding economic development, especially if it is understood under a more inclusive perspective that incorporates health and education. This finding underscores the need to promote institutional quality and to develop a mining strategy to help revert the effects of the resource curse in mineral-dependent African countries. Accordingly, we propose a series of policy measures based on four main objectives: competitiveness, transparency, sustainability and inclusiveness.

Management of natural resources and material pricing: Global evidence

Material pricing is the viable sustainable policy instrument through which the United Nations sustainable development agenda, COP24 agreement and Paris protocol for convention of climate change largely be achieved with advancement in clean energy technologies. This study is in line with the stated theme and examined the role of material pricing, ores & metal exports, and natural resource rents in the environmental sustainability agenda for low (L), middle (M), high (H) income countries, and world (W) aggregated countries data set, for a period of 1975–2017. The study further assessed the role of material pricing in mitigation of carbon emissions, achieving energy efficiency and amplify World per capita income for the next 10 years time period. This would be helpful to devise resource conservation policies across the globe. The results show that material pricing increases carbon emissions and decreases energy efficiency that negatively effect on World income, while ores & metal exports achieved energy efficiency via the channel of mitigating global carbon emissions. Mineral rents, oil rents, and natural gas rents verified the ‘carbon-resource curse’ hypothesis under materials pricing. The income per capita, FDI inflows, and trade liberalization policies support to achieve energy efficiency on the cost of high carbon emissions, which verified the ‘pollution haven’ hypothesis across the globe. The study verified the long-run and inter-temporal relationship between the candidate variables for the next 10 years time period. The study concludes that material pricing and emissions trading system both policies are imperative in resource constraint environment to mitigate carbon emissions stock. The advancement in clean energy technologies is the key to regulate environmental policies for promoting sustainable production and consumption across the globe.

Financial management of natural resource market: Long-run and inter-temporal (forecast) relationship

The financial management of natural resource market is imperative to achieve global environmental sustainability agenda through financing green projects. The objective of the study is to examine the role of financial development and growth specific factors on natural resource market in a context of Pakistan by using a time series data from 1970 to 2018. The results show that in the short-run, there is a negative relationship between broad money supply and total natural resource rents (including coal rents, mineral rents, and oil rents) while carbon tax negatively impact total natural resource rents through low mineral rents, thus the viability of ‘resource curse’ hypothesis is confirmed under financial constraint environment in a country. The ‘resource enhancing’ growth activities are largely visible with country's per capita income, FDI inflows, and trade openness that increases forest rents, mineral rents and oil rents respectively. In the long-run, broad money supply and carbon tax negatively impact a large number of prescribed natural resource rents with mediation of population density, while FDI inflows and trade in service supported few resource rents that entrenching growth activities in a given time period. The results further discussed the forecast relationship between financial factors and natural resource markets, which gives sound inferences to develop green financing resource management policies in a country.

Mining\u2019s contribution to national economies between 1996 and 2016

In several low- and middle-income countries rich in non-fuel mineral resources, mining makes significant contributions to national economic development as measured by the revised Mining Contribution Index (MCI-Wr). Ten countries among the 20 countries where mining contributes most (highest MCI-Wr score) have moved up one or two steps in the World Bank’s country classification between 1996 and 2016. In particular, African countries have benefitted. Socio-economic development indicators also show signs of progress for African mineral-rich countries. This paper provides an update and expansion of an earlier study within the framework of the United Nations University (UNU) World Institute for Development Economics Research (WIDER) initiative Extractives for Development. Based on the detailed data available for the sector, such as production, export, prices, mineral rents, exploration expenditure and government revenues, an analysis is carried out of the current situation for 2016, and trends in mining’s contribution to economic development for the years 1996–2016. The contribution of minerals and mining to GDP and exports reached a maximum at the peak of the mining boom in 2011. Naturally, the figures for mining’s contribution had declined for most countries by 2016, but importantly the levels were still considerably higher than in 1996. The results of this survey contradict the widespread view that mineral resources create a dependency that might not be conducive to economic and social development. In addition, this paper presents an attempt to use already available socio-economic indicators for African mineral-rich countries to measure socio-economic developments. One preliminary conclusion of this survey is that mining countries perform better than oil-producing countries and non-mineral countries in Africa as measured by these indices of human development and governance.

Comparative Study of the Impact of Oil Rent on Healthcare in Nigeria and Cameroon: A Three Stage Methodical Approach

The study comparatively examined the impact of oil rent on healthcare in Nigeria and Cameroon from 1995 to 2015. The objectives of the study are to; study the trend of oil rents and healthcare in Nigeria and Cameroon; examine the relationship between oil rent and healthcare of Nigerians and Cameroonians and determine the impact of mineral rent on the healthcare of Nigeria and Cameroon. To achieve these objectives panel data were collected on health, oil rent and mineral rent and analyzed using the econometric techniques of panel unit root test and panel cointegration test as well as graphical method. The panel unit root and cointegration test showed that all the series are indeed stationary and have long run equilibrium relationship. Comparatively, the graph showed that the rents from oil in Nigeria are lower than that of Cameroon. Also, Cameroon performs better in rents from minerals than Nigeria. Thus, Cameroon capital expenditure on health has steadily increased since 1995 up to 2015 while Nigeria seems not to take healthcare expenditure serious hence the dismal performance in the infant mortality rates. Based on the findings, it is recommended that revenue from oil should be towards inclusive growth, thereby impacting significantly on the healthcare and welfare of the citizens. Thus, there should be investment in primary as well as maternal health in the rural areas for the disadvantaged in society.

Determinants of Public Debt and the Role of Energy: A Cross-Country Analysis

This paper investigates the major drivers of the public debt growth in 184 countries. The underlying cross-country survey is conducted on the basis of the improved compilation of datasets on the central government debt for 2013. The study finds that oil abundance, economic growth rate, the share of mineral rent in the total revenue, interest rate payments for foreign borrowings, and being a developing country have statistically significant impact on the growth of the public debt. In contrast, defense spending, unemployment rate, and inflation rate do not have a statistically significant positive impact on the public debt rate.

Armed Conflicts and Intra‐regional Trade Flows: The Cases of ECOWAS and COMESA

AbstractIn this study, we investigated the impact of armed conflicts on intra‐regional trade flows. We made use of panel datasets from 15 ECOWAS member and 19 COMESA member countries for the period 1997 to 2015. Applying a robust functional estimation procedure based on IV GMM principles, the results are found to be regionally comparable, with the evidence indicating that armed conflicts constrain intra‐regional export and trade openness. The results indicate that the classical insurgency theory explains better the patterns of intra‐regional export flows and trade openness; whereas the economic interest theory explains better the patterns of intra‐regional import flows. The impact of armed conflict intensity on intra‐regional trade flows is found to be sensitive to border proximity, trade diversification, mineral rents and national income levels. While border proximity on its own enhances intra‐regional export and import flows, it also has the tendency of exacerbating the negative impact of armed conflicts. As armed conflicts intensify, for instance, member countries become more incentivized to implement secured border and trade policies as a way of guarding against counter flows of arms and illicit commodities. Our study confirms the need for regional economic communities to concentrate their integration efforts towards mitigating domestic and cross‐border armed conflicts.

Curse or Blessing? An Empirical Re‐examination of Natural Resource‐Growth Nexus

AbstractThis study re‐examines the natural resource abundance‐growth nexus for a large sample of countries. Our findings indicate that total resource, coal, mineral, natural gas and oil rents have significantly positive effects on growth while forest rents have negative effects. While estimation results show that coal and mineral rents raise growth for resource poor countries, natural gas and oil rents (forest rents) raise (lower) growth for resource‐rich countries. Overall, our results fail to support the natural resource curse hypothesis. On the contrary, we can conclude that, except for forest rents, resource rents appear to be a blessing rather than a curse. Copyright © 2018 John Wiley & Sons, Ltd.

Mineral rents and social orders: when Radetzki meets Douglass North

The “social orders” conceptual framework published in 2009 by Douglass North, John Joseph Wallis, and Barry Weingast allows a new reading of the political economy of rents in mineral-exporting countries. The paper explores how some findings of mineral economics research from the 1980s and 1990s can be reassessed within this framework.

Management of business economic growth as function of resource rents

Economic profit could be influenced by economic rents. However natural resource rents provided different impact on the economic growth or economic profit. The main focus of the study was to evaluate the economic growth as function of natural resource rents. For such a purpose machine learning approach, artificial neural network, was used. The used natural resource rents were coal rents, forest rents, mineral rents, natural gas rents and oil rents. Based on the results it is concluded that the machine learning approach could be used as the tool for the economic growth evaluation as function of natural resource rents. Moreover the more advanced approaches should be incorporated to improve more the forecasting accuracy.

Competitive Clientelism and the Political Economy of Mining in Ghana

This paper offers a political economy explanation to the question of why over 100 years of mineral resource extraction in Ghana has failed to translate into broadbased development. It does so through the lens of political settlements, which draws attention to how relations of power and ideas shape elite commitment to allocating mineral resources towards long-term development goals. The analysis draws attention to how clientelist political pressures engendered by Ghana’s highly competitive electoral system have historically underpinned the diversion of mineral revenues towards shorter-term goals of maintaining the stability of ruling coalitions. In particular, all ruling coalitions have allocated significant shares of mineral rents to chiefs not necessarily for the socio-economic development of their communities, but mainly because political elites want to avoid provoking resistance from a group in society that brokers land and votes in rural areas. These findings challenge recent suggestions concerning the centrality of inclusive political settlements for the effective management of mineral rents. As the analyses reveal, broad-based elite inclusion can also carry the danger of undermining the effective management of rents for long-term development if mineral rents are deployed with the aim of ‘buying-off’ elites who can potentially undermine the stability of ruling coalitions. Under such circumstances, inclusive political settlements may at best result in unproductive peace, as substantial mineral resources are shared for consumption rather than development.

Economic Growth in Ghana: A Vector Error Correction Model (VECM) Approach from 1970-2015

Time series datasets was collected from 1970-2015 to empirically test for the factors that drive economic growth in Ghana using a cointegration analysis and a Vector Error correction modeling(VECM). The findings were that growth of output is driven by exports and government spending which are both statistically significant as well. Oil rent, mineral rent, investment and household consumption expenditure do not drive long run growth of output in the period understudy. Amongst the latter, oil rent, investment and consumption are statistically significant except for mineral rent which is not. Since export is a notable driver of growth in the long run, it is vital to look at the exposure of our exports commodities (gold, cocoa and oil) to external shocks, perhaps finding measures to limit the revenue shortfalls due to the shocks/volatilities will be a step to sustain the growth potentials of the economy. With government spending being statistically significant a contributor to longrun growth, government is encouraged to practice the Keynesian type so as to stimulate domestic demand.

Macroeconomic and Political Determinants of Resource Nationalism

Resource nationalism is essentially mandatory government intervention in natural resources businesses by political or economic means in order to benefit the nation and the people. It is attacking the mining industry more and more rampantly by all kinds of means since the twenty-first century. Poor countries who count on a resource-led economic growth usually find themselves trapped into “resource curse”. The harmfulness of resource nationalism for investors is that one event can quickly escalate and lead to a chain of events which make projects commercially unavailable. In spite of historical and theoretical social investigations in the causes of resource nationalism, rare studies engaged in quantification of dominant parameters of it. The objective of this study is to find significant factors that dominate the occurrence of resource nationalism for important metal and energy resources producing countries and quantify their marginal effects. The study applies binary choice logit model for panel data using pooled method. One feature of the research is that binary data set of occurrence of resource nationalism are sorted out by authors referencing U.S. Geological Survey’s reports. The results indicate that high-technology export (% manufactured export), ores and metals exports (% merchandise exports), rule of law (world governance indicator), trade (% GDP), and natural resource rent except forest (% GDP ) dominant the occurrence of resource nationalism for high and upper middle income group countries; government effectiveness (world governance indicator), policy perception index (The Fraser Institute), high-technology export (% manufactured export), and mineral rent (% GDP) dominant the occurrence of resource nationalism for lower middle and low income countries. According to our model, probability of occurrence of resource nationalism in 90 countries are predicted. Top 10 risky countries in 2012 are estimated to be North Korea, India, Honduras, Indonesia, Kazakhstan, Burkina Faso, Mongolia, Cuba, Bolivia, and Peru. The study is a primary trial of researching on resource nationalism and provides some insights for theoretical building and simulation on the issue.

Decomposing the linkages between energy consumption, air pollution, climate change, and natural resource depletion in Pakistan

This study aims at examining the causal relationship between energy consumption, natural resources, environmental pollution (i.e., CO2 emissions) and climate change (i.e., Greenhouse gas emissions ‐ GHG) in the context of Pakistan, over the period of 1975–2012. The study applied bivariate cointegration and Granger causality technique for robust inferences. The results show that energy demand increases gas rents, natural resource rents, and oil rents while it exhausts the natural resources. Natural resources further affected by air pollution and climate change in a country. The results of Granger causality indicate that there is a bidirectional causality between (i) energy consumption and net forest depletion, (ii) energy demand and oil rent, (iii) forest rents and CO2 emissions, (iv) natural resource depletion and GHG emissions, and (v) net forest depletion and GHG emissions, while, there is a unidirectional causality running from CO2 emissions to oil rents, from net forest depletion to CO2 emissions, and from GHG emissions to forest rent, mineral rent, natural gas rent, and oil rent in a country. Finally, the study confirmed the “neutrality hypothesis” between coal rent, natural resource rent, and GHG emissions in Pakistan. © 2016 American Institute of Chemical Engineers Environ Prog, 36: 638–648, 2017