Over a decade of high commodity prices and new mineral and hydrocarbon discoveries across the developing world has led to renewed attention to the possibility of natural resource-based development. Much focus has been placed on revenues from mineral rents as being the main driver. With the end of the commodity boom, prices have fallen dramatically. Oil fell by 70 percent from $100 per barrel in mid-2014 to just over $30 per barrel by March 2016. Similarly, iron-ore, coal and copper prices have tumbled by 75 percent, 61 percent and 53 percent respectively since 2011. Countries dependent on revenues from these commodities have been hit hard. Venezuela, for example is unable to import food and medicine to satisfy the basic needs of its population due to the lack of petrodollars. Russia’s economy contracted in 2015 and is expected to remain in recession in 2016. Zambia saw its fiscal deficit widen due to falling copper prices last year and the kwacha has been among the worst performing currency in Africa.
In light of these developments, the panel discussed whether governments of resource-rich countries should emphasize the creation of economic and infrastructure linkages to support economic diversification since skills and technologies earned in the mining and oil sectors may be transferred to other sectors during commodity downturns.
Nicolas Maennling, Senior Economics and Policy Researcher, Columbia Center on Sustainable Investment
Framed the talk by providing an overview of the linkages to the extractive sector and moderated the ensuing discussion.
Jesse Ovadia, Director of the MA in Globalization, Poverty and Development, Newcastle University
Presented the findings from his recently published book, The Petro-Developmental State in Africa, which considers newly emerging potential for state-led development in petroleum-rich developing states by examining local content trends in sub-Saharan Africa’s biggest oil producers, Angola and Nigeria.
Andrew Bauer, Senior Economic Analyst, Natural Resource Governance Institute
Discussed how subnational governments and communities can take full advantage of extraction during both upturns and downturns in the commodity price cycles. He then discussed the practical challenges faced at the subnational level to managing the sector and creating linkages to the extractive industries.
Co-sponsored by: Natural Resource Governance Institute