Australia advises on avoiding 'resource curse'

May 21, 2013 at 3:06 PM
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SYDNEY, May 21 (UPI) -- If resource-rich developing countries can avoid the "resource curse," they could reduce dependency on aid, an Australian government official said.

Speaking in Sydney at the Mining for Development Conference, Andrew Leigh, a noted economist and parliamentary secretary to Australian Prime Minister Julia Gillard said, ''If developing countries can benefit from their minerals, the pay-off could dwarf anything that aid might hope to deliver,'' The Canberra Times reports.

More than 600 delegates from 69 countries attended the conference, sponsored by the Australian government's $127 Million Mining for Development Initiative, launched in October 2011.

The initiative is aimed at helping more than 30 developing countries in Africa, Asia-Pacific and Latin America to use natural resources to improve their economies in a sustainable manner.

Resource-rich Australia has an obligation to share its mining experience with developing countries, Leigh said.

''Like Australia, many developing countries are well-endowed with natural resources and yet we all know of the 'resource curse' -- the fact that developing nations who have more natural resources tend to have lower growth rates and perform more poorly on indicators of democracy," he said.

The developing world's portion of mineral, petroleum and gas exports is rising, with 50 percent of global trade coming from these countries, from 30 percent 15 years ago, Mining Australia reports.

But for the approximately 3.5 billion people in poor countries with a major extractive industry, the resource curse -- the poverty, corruption, conflict and environmental damage that often comes with resource industries -- is a threat.

Paul Collier, professor of economics and public policy at Oxford University, also speaking at the conference, said the mining sector can spread development by sharing their infrastructure, such as train lines or power to local communities.

"Some of the most transparent companies on Earth are major Australian resource companies," he noted, adding that those companies face competition globally from corrupt and secretive operators.

However, a report by Oxfam Australia released ahead of the conference said that Rio Tinto was the only company of the 53 biggest miners on the Australian stock exchange that had a public commitment to the United Nation's principles on gaining consent from Indigenous people before beginning projects on their land.

"Australian companies are not only trying to access minerals on indigenous peoples' land here in Australia, but are increasingly venturing overseas to do the same," Oxfam Australia's Chief Executive Helen Szoke said in a statement.

Australia has more than 300 mining companies operating in Africa as well as companies working in Asia, the Pacific and Latin America, the Australian Broadcasting Corp. reports.

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