CIAO DATE: 02/2014
December 2013
Danish Institute for International Studies
This Policy Brief explores how the possibilities offered by natural resource development best can be exploited for industrial development purposes. Natural resource-driven development in Africa has emerged as a hot topic, heating up the economies and raising political elites and populations expectations. The hope is that extractive industries will generate foreign revenues, create jobs and boost economic growth. The brief argues that industrial policies are needed in order to unleash the development potentials provided by foreign direct investment (FDI) in extractives. In this regard the four authors argue that donors should engage more actively in the extractive sectors where they can play a pivotal role in securing positive development outcomes. Besides suggesting that donors should tie their numerous value chain development programs to promote linkages to the extractives industries, the Policy Brief argues that donors should take into consideration how their programs affect the balance between local political and economic elites. As such policy recommendations should reflect the ‘good fit’ with local contexts, institutions and politics, and not only the ‘best practices’ on which donors typically base their advice. There is a tendency to discuss natural resource development and industrial policy purely in terms of economic efficiency terms, thus neglecting the political context in which such polices are implemented.
Resource link: The lure of extractive natural resource development [PDF] - 133K