The contribution of the mining sector to sustainability in developing countries

Abstract

Does the mining sector contribute to, or detract from, the achievement of sustainable development in developing countries? Sustainability is defined as development that will give future generations opportunities equal to or greater than those of the present generation. Treating gross income per capita as an imperfect proxy of these opportunities, a test is made to investigate whether increases in mining GDP have led to long-run increases in GNP per capita despite the exhaustibility of mineral deposits. This is a more encompassing criterion than the conventional Hartwick criterion which establishes necessary conditions for the achievement of a related definition of sustainability. A vector autoregression model (VAR) is estimated for each of 19 non-OPEC developing countries with large mining sectors. Using the impulse response functions, the long-run multiplier of mining income on GNP is calculated. The sustainability criterion developed in the paper requires the multiplier to exceed a minimum value. This test is carried out under alternative assumptions regarding future mining income. Show more