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The money pit: an analysis of Naurus phosphate mining policy

CollectionsPacific Economic Bulletin (1991-2010)
Title: The money pit: an analysis of Naurus phosphate mining policy
Author(s): Cox, Jeremy
Publisher: Crawford School of Public Policy, The Australian National University
Asia Pacific Press
Nauru's current financial crisis is a direct result of its own mishandling of its mineral wealth. Nauru's mineral trust funds are public (government-managed) property, rather than the subject of private property rights. Public officials have unsustainably and irresponsibly exploited Nauru's trust funds for decades, denying future generations the benefit of the phosphate resource by subsidising public consumption instead of looking for long-term investment in human and physical capital. In contrast, the mineral trust funds of other countries, such as the Norwegian Petroleum Fund and the Alaskan Permanent Fund, have been successful in managing mineral wealth by maintaining clear rules regarding governance, and diverting dividends to individuals rather than to government bodies to manage. The sad history of Nauru's phosphate is a timely warning to developing countries deciding how to maximise benefits from finite non-renewable resources.
ISSN: 1834-9455 (online)
0817-8038 (print)


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