Skip to main content
SpringerLink
Log in

Diversifying mineral economies: conceptualizing the debate on building linkages

  • Original Paper
  • Published:
Mineral Economics Aims and scope Submit manuscript

Abstract

This article conceptualises the debate on ‘how to build linkages’ between the minerals and other economic sectors. It argues that this is the most recent of three key questions that have guided the policy debate on minerals and development since the 1980s. The two preceding questions were ‘how to attract foreign investment’ and ‘how to avoid ‘resource curse’. The article reviews each of these three questions before it discusses the industry responses that they have prompted. Finally, it draws out lessons for the linkages debate from the experience gained with improving project-level environmental and social performance, in particular for delivering on local content expectations and requirements.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Notes

  1. This work has included the well-known article by Sachs and Warner (1995) and the many cross-country statistical analyses on resource curse that followed.

  2. For example, this has included Terry Karl’s case study on Venezuela (1997).

  3. Review articles on this literature include Rosser (2006a, b), Stevens (2003, 2006), Weinthal and Luong (2006), Humphreys et al. (2007), Stevens and Dietsche (2008), Van der Ploeg (2008) and Barma et al. (2012).

  4. See for example Robinson et al. (2006) and Collier and Hoeffler (2004).

  5. Examples of the work by economic historians include North and Thomas (1973), North (1990, 2006), North (2006) and Mahoney and Rueschemeyer (2003). Koelble (1995), Hall and Taylor (1996), Immergut (1997) and Thelen (1999) contained reviews of the political science literature. Granovetter and Swedberg (2011) provided a compendium of the work by economic sociologists. Williamson (1985), Hall and Soskice (2001) and Eichengreen (2007) compared OECD countries.

  6. See for example Mehlum et al. (2006a, b), Collier and Benedikt (2007) and Bhattacharyaa and Hodler (2010).

  7. See for example, the synthesis and conclusion in Collier and Venables (2010).

  8. This extension of linkage theory draws inspiration from Arthur Lewis’ analysis of the social foundation of plantation economies, where he argued that it is not only the technology of production but also the structure of society that constrains economic and social development.

  9. Note that, instead of backward and forward linkages, Morris et al. (2012) used the terminology of upstream and downstream linkages.

  10. The literature for OECD countries includes Williamson (1985), Steinmo et al. (1992), Hall and Soskice (2001), Ostrom (2005) and Eichengreen (2007). The literature for East Asian countries includes Haggard (2004), Khan (2000, 2002), Chang (2007) and Lin (2012).

  11. For example, in Ghana, a local content law was approved in 2013 and in Tanzania the government is in the process of finalising a new local content policy.

  12. The World Bank’s management response to the recommendation of the EIR was that, rather than disengage, it would use its influence in producer countries to improve sector governance.

  13. There has been some overlap between the missions and objectives of the different initiatives. Recognising this, as of June 2014, the RWI and the NRC merged into a new entity, the Natural Resource Governance Institute (NRGI).

  14. See http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf (last accessed: 02.10.2013).

  15. For example, since 2010 Rio Tinto has published a stand-alone annual report on ‘Taxes paid’, providing details down to the level of municipalities where its materiality threshold of US$1 million applies. For 2012 and 2013, Tullow Oil has voluntarily piloted reporting detailed information on payments to governments in line with the expected requirements of the new EU Accounting Directive. By means of conducting integrated country case studies, the ICMM has supported a number of companies to report in detail their contributions to specific national and local economies, including, for example, Tanzania, Zambia and Brazil.

  16. See for example Rees et al. (2012), Davis and Franks (2014) and McNab et al. (2012).

  17. There is, however, recent literature emerging that seeks to identify under what conditions corporate entities and other third parties are able to provide public goods and services in geographical areas where limited statehood prevails. See Krasner Stephen and Thomas (2014), Hönke and Thauer (2014) and Lee et al. (2014).

  18. For a historical comparative analysis of the UK’s experience, see Smith (2009).

  19. See Collier and Venables (2010) for a discussion of such a threshold level.

References

  • Acemoglu D, Johnson S, Robinson JA (2001) The colonial origins of comparative development: an empirical investigation’. Am Econ Rev 91(5):1369–1401

    Article  Google Scholar 

  • Acemoglu D, Johnson S, Robinson JA (2003) An African success story: Botswana’. In: Rodrik D (ed) In search of prosperity: Analytical narratives on economic growth. Princeton University Press, Princeton

    Google Scholar 

  • Ahrens J (2002) Governance and economic development: a comparative institutional approach. Edward Elgar, Cheltenham

    Google Scholar 

  • Aneel, K (2010) ‘The case against corporate social responsibility’. Wall Str J

  • Atsushi, I (2006) ‘Did Botswana escape from the resource curse?’ IMF Working Paper. WP/06/138

  • Auty RM (ed) (2001a) Resource abundance and economic development. UNU—wider studies in development economics. Oxford University Press, Oxford

    Google Scholar 

  • Auty RM (ed) (2001b) The political economy of resource-driven growth’, vol 45, European economic review., pp 839–846

    Google Scholar 

  • Baldwin RE (1956) Patterns of development in newly settled regions’. Manchester Sch Soc Econ Stud 24:161–179

    Article  Google Scholar 

  • Barma N, Kaiser K, Le TM, Viñuela L (2012) Rents to riches. The political economy of natural resource-Led development. The World Bank, Washington

    Google Scholar 

  • Bhattacharyaa S, Hodler R (2010) ‘Natural resources, democracy and corruption’. Eur Econ Rev 54:608–621

    Article  Google Scholar 

  • Bulte EH, Damania, R, Deacon, RT (2004) Resource abundance, poverty and development. Working papers 04–03. Agricultural and development economics division of the food and agricultural organization of the united nations (FAO-EAS)

  • Cameron, PD (2010) International energy investment law. The pursuit of stability. Oxford University Press

  • Chang H-J (2007) Institutional change and economic development. Anthem Press and UNU Press, London

    Google Scholar 

  • Clausen JR (2008) ‘Calculating sustainable non-mineral balances as benchmarks for fiscal policy: the case of Botswana on Botswana’. IMF working paper. WP/08/117. International Monetary Fund, Washington

    Google Scholar 

  • Collier P, Hoeffler A (2004) Greed and grievance in civil War. Oxf Econ Pap 54:563–595

    Article  Google Scholar 

  • Crowson P (2007) ‘The resource curse: a modern myth?’. In: Richards JP (ed) Mining, society and a sustainable world. Springer, Heidelberg

    Google Scholar 

  • Davis R, Franks DM (2014) Costs of company-community conflict in the extractive Sector’. Corporate social responsibility initiative report No 66. Harvard Kennedy School, Cambridge

    Google Scholar 

  • Davis R, Daniel M, Franks N (2011) ‘The costs of conflict with local community in the extractive industry’. First international seminar on social responsibility in mining. 19–21 october 2011. Santiago, Chile

    Google Scholar 

  • Dietsche E (2007) Why the quality of institutions is not a cure for the ‘resource Curse’. J Energy Dev 32(2):262–282

    Google Scholar 

  • Easterly W (2002) The elusive quest for growth. Economists’ adventures and misadventures in the tropics. The MIT Press, Cambridge and London

    Google Scholar 

  • Easterly W, Ritzen J, Woolcock M (2006) ‘Social cohesion, institutions, and growth’. Econ Polit 18:103–120

    Article  Google Scholar 

  • Ebrahim-Zadeh C (2003) ‘Back to basics: dutch disease: too much wealth managed unwisely’. Finance Dev 40(1)

  • Eggertsson T (2005) Imperfect institutions. Possibilities and limits of reform. University of Michigan Press, Ann Arbor

    Google Scholar 

  • Eichengreen B (2007) The european economy since 1945: Coordinated capitalism and beyond. Princeton University Press, Princeton

    Google Scholar 

  • Elinor O (2005) Understanding institutional diversity. Princeton University Press, Princeton and Oxford

    Google Scholar 

  • Findlay R, Mats L (2001) ‘Natural resources and economic development: the 1870–1914 Experience’. In: Auty R (ed) Resource abundance and economic development. UNU-wider studies in development economics. Oxford University Press, Oxford

    Google Scholar 

  • Granovetter M, Swedberg R (eds) (2011) The sociology of economic life, 3rd edn. Westview Press, Boulder

    Google Scholar 

  • Guajardo B, Carlos J (2012) ‘Mineral rents and social development in Chile’. In: Hujo K (ed) Mineral rents and the financing of social policy. Opportunities and challenges. Palgrave Macmillian, Basingstoke

    Google Scholar 

  • Haggard S (2004) Institutions and growth in East Asia’. Stud Comp Int Dev 38(4):53–81

    Article  Google Scholar 

  • Hall PA, Soskice D (2001) Varieties of capitalism: the institutional foundations of comparative advantage. Oxford University Press, Oxford

    Book  Google Scholar 

  • Hall PA, Taylor RCR (1996) Political science and the three new institutionalisms’. Polit Stud 31:1–23

    Google Scholar 

  • Harvey B (2011) ‘Foreword: SIA from a resource developer’s perspective’. In: Vanclay F, Esteves AM (eds) New directions in social impact assessment. Conceptual and methodological advances. Edgar Elgar, Cheltenham and Northampton

    Google Scholar 

  • Harvey B (2013) Social development will not deliver social license to operate for the extractives sectors. Ext Ind Soc 1(1):7–11

    Google Scholar 

  • Hirschman A (1977) ’A generalized linkage approach to development, with special reference to staples’. In: Nash M (ed) Essays on economic development in honor of Bert F. Hoselitz. Chicago University Press, Chicago

    Google Scholar 

  • Hönke J, Thauer CR (2014) ‘Multinational corporations and service provision in Sub-Saharan africa: Legitimacy and institutionalization matter’. Gov: Int J Policy, Admin, Inst. doi:10.1111/gove.12072

    Google Scholar 

  • Humphreys M, Sachs JD, Stiglitz JE (eds) (2007) Escaping the resource curse. Columbia University Press, New York

    Google Scholar 

  • IBRD/World Bank (1996) ‘A mining strategy for Latin american and the Caribbean’. World bank technical paper. No. 345. The World Bank, Washington

    Google Scholar 

  • ICMM (2007) Chile country case study. London: International Council on Mining and Metals, Geneva: UNCTAD, Washington, DC: World Bank

  • IIED/WBCSB (2002) Breaking New ground: Mining, minerals and sustainable development. Earthscan, London and Sterling

    Google Scholar 

  • Imbs J, Wacziarg R (2003) Stages of economic diversification’. Am Econ Rev 93:63–86

    Article  Google Scholar 

  • Immergut E (1997) ‘The normative roots of the new institutionalism: Historical-institutionalism and comparative policy studies’. In: Benz A, Seibel W (eds) Theorienentwicklung in der politikwissenschaft: Eine zwischenbilanz. Nomos Verlagsgesellschaft, Baden-Baden

    Google Scholar 

  • Innes H (1920) The Fur trade in Canada. CT: Yale University Press, New Haven

    Google Scholar 

  • Jenson N, Wantchekon L (2004) ‘Resource wealth and political regimes in africa. Comput Polit Stud 37(7):816–841

    Article  Google Scholar 

  • Jonathan, D (2010) ‘Human rights and the extractive industries: litigation and compliance trends’. J World Energy Law Bus 3(2)

  • Jonathan, I, Woolcock, M, Pritchett, L, Busby, G (2005) ‘The varieties of resource experiences: how natural resource export structures affect the political economy of economic growth’. World Bank Econ Rev 19(2)

  • Karl TL (1997) The paradox of plenty: Oil booms and petro states. University of California Press, Berkeley

    Google Scholar 

  • Kemp D, Owen JR (2013) Community relations and mining: Core to business but not “core business”’. Resour Policy 38:523–531

    Article  Google Scholar 

  • Kemp D, Vanclay F (2013) Human rights and impact assessments: Clarifying the connections in practice’. Impact Assess Proj Apprais 31(2):86–96

    Article  Google Scholar 

  • Kemp D, Owen JR, van de Graaff S (2012) ‘Corporate social responsibility, mining and “audit culture”. J Clean Prod 24:1–10

    Article  Google Scholar 

  • Khan M (2000) ‘Rent-seeking as a process’. In: Khan M, Jomo Rents KS (eds) Rent-seeking and economic development. Theory and evidence in Asia. Cambridge University Press, Cambridge

    Chapter  Google Scholar 

  • Khan M (2002) State failure in developing countries and strategies of institutional reform’. In: Pleskovic B (ed) Annual world bank conference on development economics, europe 2002–2003. Towards Pro–poor policies. Aid, institutions and globalization. World Bank, Herndon

    Google Scholar 

  • Kitzmueller M, Shimshack J (2012) Economic perspective on corporate social responsibility’. J Econ Lit 50(1):51–84

    Article  Google Scholar 

  • Koelble TA (1995) The new institutionalism in political science and sociology’. Review article. Comput Polit 27(2):231–243

    Article  Google Scholar 

  • Krasner SD, Risse T (2014) ‘External actors, state-building, and service provision in areas of limited statehood: introduction’. Gov: Int J Policy, Admin, Inst. doi:10.1111/gove.12065

    Google Scholar 

  • Lange G-M, Wright M (2004) Sustainable development in mineral economies: the example of Botswana’. Environ Dev Econ 4:485–505

    Google Scholar 

  • Lederman D, Maloney WF (2007) Natural resources: Neither curse, nor destiny. The World Bank and Stanford University Press, Washington

    Google Scholar 

  • Lee MM, Walter-Drop G, Wiesel J (2014) Taking the state (back) out? statehood and the delivery of collective Goods’. Gov: Int J Policy, Admin, Inst. doi:10.1111/gove.12069

    Google Scholar 

  • Lin JY (2012) The quest for prosperity. How developing economies can take off. Princeton University Press, Princeton

    Google Scholar 

  • Mahoney J, Rueschemeyer D (2003) Comparative historical research in the social sciences. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Maniruzzaman AF, Munir (2008) ‘The pursuit of stability in international energy investment contracts: a critical appraisal of the emerging trends’. J World Energy Law Bus 1(2):121–157

    Article  Google Scholar 

  • Matt, A (2013) The limits of institutional reform in development. Changing rules for realistic solutions. Cambridge University Press

  • McNab K, Keenan J, Brereton D, Kim J, Kunanayagam R, Blathwayt T (2012) Beyond voluntarism: the changing role of corporate social investment in the extractives sector. CRSM, University of Queensland, Brisbane

    Google Scholar 

  • Mehlum H, Moene K, Torvik R (2006a) ‘Institutions and the resource curse’. Econ J 116(1):1–20

    Article  Google Scholar 

  • Mehlum H, Moene K, Torvik R (2006b) ‘Cursed by resources or institutions?’. World Econ 29(8):1117–1138. doi:10.1111/j.1467-9701.2006.00808

    Article  Google Scholar 

  • Mkandawire T (2012) ‘Institutional monocropping and monotasking in Africa’. In: Noman A, Botchwey K, Stein H, Stiglitz JE (eds) Good growth and governance in Africa. Rethinking development strategies. Oxford University Press, Oxford

    Google Scholar 

  • Moore M (2004) Revenues, state formation, and the quality of governance in developing countries’. Int Polit Sci Rev 25(3):297–319

    Article  Google Scholar 

  • Morris, M, Kaplinksy, R, Kaplan, D (2012) One THING LEADS TO ANOTHER. Promoting Industrialisation by Making the Most of the Commodity Boom in Sub-Saharan Africa. University of Cape Town

  • North DC (1990) Institutions, institutional change and economic performance. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • North DC (2006) Understanding the process of economic change. Princeton University Press, Princeton

    Google Scholar 

  • North DC, Thomas RP (1973) The rise of the western world. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • North DC, Anderson TL, Hill PJ (1966) Growth and welfare in the American past: a new economic history, 3rd edn. Prentice Hall, Englewood Cliffs (1973, 1983)

    Google Scholar 

  • Onorato WT (1995) Legislative frameworks used to foster petroleum development. Policy research working paper No. 1420. World Bank, Washington

    Google Scholar 

  • Opper S (2008) ‘New institutional economics and its application on transition and developing economies’. In: Brousseau E, Glachant J-M (eds) New institutional economics. A guidebook. Cambridge University Press, Cambridge

    Google Scholar 

  • Orihuela JC (2013) “How do “mineral-states” learn? path-dependence, networks, and policy change in the development of economic institutions. World Dev 43(1):138–148

    Article  Google Scholar 

  • Ostrom E (2005) Understanding institutional diversity. Princeton University Press, Princeton and Oxford

  • Owen JR, Kemp D (2013) Social licence and mining: a critical perspective. Resour Policy 38:29–35

    Article  Google Scholar 

  • Øystein, N (2004) Norway: ‘economic diversification and the petroleum industry’. Middle East Econ Surv 77(45)

  • Paul, S (2003) “Resource impact—curse or blessing. A literature survey”, IPIECA

  • Paul, C, Goederis, B (2007) Commodity prices, growth, and the natural resource curse: Reconciling a conundrum. Department of Economics, University of Oxford (preliminary draft)

  • Paul, C. Venables, AJ (2010) ‘Natural resources and state fragility’. EUI Working Papers, RSCAS 2010/36. Robert Schuman Centre for Advanced Studies

  • Pegg S (2012) ‘Has Botswana beaten the resource curse?’. In: Hujo K (ed) Mineral rents and the financing of social policy. Opportunities and challenges. Palgrave Macmillian, Basingstoke

    Google Scholar 

  • Per, H (2008) ‘Local content development. Experiences from oil and gas activities in Norway’. SNF Working Paper No. 02/08

  • Perälä M (2003) Persistence of underdevelopment: Does the type of natural resource endowment matter? Discussion paper No. 2003/37. United Nations University WIDER, Helsinki

    Google Scholar 

  • Rees C, Kemp D, Davis R (2012) ‘Conflict management and corporate culture in the extractive industries: a study in Peru.’ corporate social responsibility report No. 50. John F. Kennedy School of Government, Harvard University, Cambridge

    Google Scholar 

  • Robinson JA, Torvik R, Verdier T (2006) Political foundations of the resource curse’. J Dev Econ 79:447–468

    Article  Google Scholar 

  • Rodrik D (2007) One economics, many recipes: Globalization, institutions, and economic growth. Princeton University Press, Princeton

    Google Scholar 

  • Roland, H (2004) ‘The curse of natural resources in fractionalized countries’. Diskussionsschriften 04–04. Universitaet Bern, Volkswirtschafliches Institute

  • Romer PM (1994) The origins of endogenous growth’. J Econ Perspect 8(1):3–22

    Article  Google Scholar 

  • Ross ML (1999) The political economy of the resource curse’. World Polit 51:297–322

    Article  Google Scholar 

  • Rosser A (2006a) The political economy of the resource curse: a literature survey. Working paper No. 268. Institute of Development Studies (IDS), University of Sussex, Brighton

    Google Scholar 

  • Rosser A (2006b) Escaping the resource curse: Review essay’. Polit Econ 11(4):557–570

    Google Scholar 

  • Sachs, JD (2007) ‘How to handle the macroeconomics of oil wealth’. In Humphreys et al. Escaping the resource curse. Columbia University Press

  • Sachs JD, Warner AM (1995) Natural resource abundance and economic growth. Working paper No. 5398. NBER, Cambridge

    Book  Google Scholar 

  • Sarraf M, Jiwanji M (2001) ‘Beating the resource curse. The case of Botswana’. Environmental economics series. Paper No. 83. The World Bank, Washington

    Google Scholar 

  • Skancke M (2003) Fiscal policy and petroleum fund management in Norway’. In: Davis JM, Ossowski R, Fedelino A (eds) Fiscal policy formulation and implementation in oil-producing countries. International Monetary Fund, Washington

    Google Scholar 

  • Smith N (2009) ‘The offshore supplies office: an unusual exercise in the UK industrial intervention, with a Scottish headquarters.’. J Bus Archaeol Counc Scotl Bus Ind Histochem 25(Series 2):73–97

    Google Scholar 

  • Snyder R (2006) ‘Does lootable wealth breed disorder? A political economy of extraction framework’. Comput Polit Stud 39:943–968

    Article  Google Scholar 

  • Steinmo S, Thelen K, Longstreth F (1992) Structuring politics: Historical institutionalism in comparative analysis. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Stevens P (2006) “Resource curse” and how to avoid it’. J Energy Dev 31(1):1–20

    Article  Google Scholar 

  • Stevens P (2013) ‘History of the international oil industry’. In: Dannreuther R, Wojciech O (eds) Global resources. Conflict and cooperation. Palgrave Macmillan, Basingstoke

    Google Scholar 

  • Stevens P, Dietsche E (2008) ‘Resource curse: an analysis of causes, experiences and possible ways forward’. Energy Policy 36:56–65

    Article  Google Scholar 

  • Thelen K (1999) Historical institutionalism in comparative politics’. Ann Rev Polit Sci 2:369–404

    Article  Google Scholar 

  • Tordo S, Warner M, Manzano OE, Anouti Y (2013) Local content policies in the oil and Gas sector. The World Bank, Washington

    Google Scholar 

  • UNCTAD (2007) World investment report. Part II—transnational corporations, extractive industries and development. United Nations Conference on Trade and Development, Geneva

    Google Scholar 

  • UNECA (2011) Minerals and Africa’s development: the international study group report on Africa’s mineral regimes. Economic Commission for Africa and African Union, Addis Ababa

    Google Scholar 

  • UNIDO (2012) Promoting industrial diversification in resource intensive economies. The experiences of Sub-Saharan Africa and central Asia regions. UNIDO, Vienna

    Google Scholar 

  • Van der Ploeg F (2008) Challenges and opportunities for resource rich countries. OxCarre research paper No. 2008–05. Oxford Centre for the Analysis of Resource Rich Economies, Oxford

    Google Scholar 

  • Vanclay F, Esteves AM (2011) New directions in social impact assessments. Conceptual and methodological advances. Edgar Elgar, Cheltenham

    Book  Google Scholar 

  • Wagner J, Armstrong K (2010) Managing environmental and social risks in international oil and gas projects: Perspectives on compliance. J World Energy Law Bus 3(2):140–165

    Article  Google Scholar 

  • Weinthal E, Luong PJ (2006) Combating the resource curse’: an alternative solution to managing mineral wealth’. Perspect Polit 4(1):35–53

    Article  Google Scholar 

  • Wells LT, Ahmed R (2007) Making foreign investment safe. Property rights and national sovereignty. Oxford University Press, Oxford

    Book  Google Scholar 

  • Wiig A, Kolstad I (2010) Multinational corporations and host country institutions: a case study of CSR activities in Angola’. Int Bus Rev 19:178–190

    Article  Google Scholar 

  • Williamson O (1985) The economic institutions of capitalism. The Free Press, New York

    Google Scholar 

  • Woolcock M, Pritchett L, Isham J (2001) The social foundations of poor economic growth in resource-rich countries. In: Auty R (ed) Resource abundance and economic development. UNU—wider studies in development economics. Oxford University Press, Oxford

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Dietsche Policy Analysis Ltd. and CEPMLP, University of Dundee, London, UK

    Evelyn Dietsche

Authors
  1. Evelyn Dietsche
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Evelyn Dietsche.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Dietsche, E. Diversifying mineral economies: conceptualizing the debate on building linkages. Miner Econ 27, 89–102 (2014). https://doi.org/10.1007/s13563-014-0058-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s13563-014-0058-4

Keyword

Search

Navigation