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Submitted by Rick Rowden on
While this idea may seem appealing on the face of it, it is hardly a development strategy. That it may also help in stemming corruption seems appealing, too. But it side-steps the broader problem of a lack of development. Giving poor people a small dividend may ameliorate some suffering but people will still be poor and be stuck in underdeveloped economies. A far better use of the proceeds from mineral extraction would be to support domestic manufacturing firms with greater research and development and help build advanced services industries to reduce countries’ over-reliance on extractive industries. Countries which continue to rely on primary agriculture and mining will not get far in terms of economic development unless they also take real steps to build manufacturing and services sectors with increased value-added over time. To facilitate and support this shift towards more meaningful economic development, history shows countries will need to be able to use various industrial policies of the kinds Shanta’s organization has long opposed and outlawed for its borrowers. Like the silver-bullet of microcredit, natural resource dividends are very nice but have nothing to do with serious economic development strategies.