Revisionist theory of natural resource management
Since the resource curse theory does not reflect the situation in Ghana, it is necessary to discuss an alternative approach. The revisionist theory arose as a direct response to the lower growth theory. Scholars including Ahammad and Clements (1999), Davis (1998), Davis and Tilton (2002) and Goodland (2002) are proponents of this theory. The revisionists argue that the reported negative performances of mineral wealth economies are case-specific and not as general as the lower growth theorists argue. They also establish that the factors that might cause a mineral wealth country to perform poorly economically and socially could be several and mixed. They contend, for example, that a mineral wealth country such as Botswana has a fast-growing economy whereas Zambia is encountering some negative economic growth.
Furthermore, if the mining sector were to be excluded from the economies of these developing countries, their economies would even be lower and worse off. As a result of this, mineral wealth countries can generate economic growth and development provided the wealth is used prudently.
Refuting the arguments of the resource curse theory, the revisionists advance the position that there is no empirical evidence to demonstrate that countries that are mineral-dependent have either slower orfaster economic growth. For these scholars, the main problem of mineral wealth developing countries are not economic but political and can be associated with the capacity of government and general society to react to large revenues from mining production. In more instances, these revenues are squandered and not used for productive investments.
The revisionists criticise the lower growth theorists for not offering a workable alternative, assuming that mineral wealth countries would be better off leaving their minerals undiscovered or unexploited.
The challenge of the resource curse has been both theoretical and empirical. The main argument is that the cause of the natural resource curse by mineral dependence is weak institutions rather than the resources per se. This therefore means that the resources themselves are not a problem but the institutions that surround them are the reasons for the curse. Therefore, the concern is with the way the rents from the resources are managed rather than the rents themselves or the resources themselves that create the problem for natural resource-rich dependent countries (UNCTAD, 2013; Brunnschweiler & Bulte, 2008).
Similarly, on the issue of industrialisation and natural resources, Morris, Kaplinsky and Kaplan (2011) have also argued that the weak manufacturing capacity in several resource-dependent countries is the reason for the apparent correlation that exists between weak industrial development and low diversification on one hand and natural resource development.
The revisionist argument holds that there are several countries that have used natural resources as a catalyst to accelerate industrial development. Countries such as Canada, Norway, Australia, the USA, Germany, the UK and Sweden, which are leading world economies, are in fact strongly driven by natural resources and depended on natural resources for their early industrialisation.
Some developing countries such as Botswana, South Africa, Malaysia, Argentina and Indonesia have also benefited from using their natural resources for development (UNECA, 2013; Raines, Turok & Brown, 2001). However, Buuret al. (2013) argue that the extent to which this argument can be applicable to especially African countries depends on the political economy of that country, and that it cannot be deduced from experienced of success stories of developed countries such as the USA, Australia, Canada, Sweden and the UK or some successful countries such as Botswana, South Africa and Indonesia.
While the debate about the causes and effects of the natural resource curse continues, there is a need to focus on the huge untapped natural resource base in Africa. According to the African Development Bank
Theories and concepts 27 (AfDB), for example, since 2000, natural resources have contributed to 35% of the growth in the African continent. It also contributed to 80% of the continents exports in 2011 and more than 60% of foreign direct investment (FDI) (African Economic Outlook, 2013). When the agriculture sector is included, then the contribution of natural resources to employment in resource-dependent African countries in 2013 was 50-60%.
In the mining sector, 400,000 jobs (including direct and indirect jobs) have been created by international mining companies (African Economic Outlook, 2013: McMahon & Tracy, 2012). In the sector, an additional six million Africans are employed informally as artisanal miners. Despite the number of people in the sector and the role it is playing to reduce unemployment and poverty, it is yet to receive the needed attention from policymakers (Hilson & Garforth, 2013: Bloch & Owusu, 2012; Nylandsted, Yankson & Fold, 2009; Therkildsen, 2012).
The argument of the resource curse theory may suggest that mineral wealth countries will be better off not mining their minerals. However, as already noted, the revisionists’ arguments advocate that mineral ‘resources can be exploited and managed to contribute to poverty reduction and growth in Africa’ (Pedro, 2005: 13). This argument is premised on the notion that Africa and other non-African mineral wealth countries are endowed with different natural resources of which mineral resources are part. When the natural resources are exploited under conditions that are appropriate, it can spur and accelerate development in mineral dependent countries. Most African FDI have come from the natural resources sector, particularly minerals, oil and gas. Consequently, the mining and oil sector continue to attract the largest sources of earnings from exports.
It is in view of this that Davis and Tilton (2002) have advocated that the question is not whether or not mining should be done, rather the public policy question should be how to ensure that the mining sector is linked with other non-mining sectors to create livelihoods and contribute to poverty reduction as well as the growth of a country’s economy and people.
Mineral resource abundance can be harnessed efficiently to drive sustainable development. Economic and social development in the world’s affluent countries such as Canada, the USA, Sweden and Australia was fuelled mainly by revenues derived from natural resources. A country’s dependence on mineral resources does not necessarily predict that there will be a resource curse.
