Saturday 11 August 2012

RE: [wanabidii] From Resource Curse to Blessing

I agree with Mwalimu Lwaitama but multiple democracies alone are not adequate to avoid the resource curse.  Mind set and attitude that cause lack of self confidence, self esteem (kijitambua, kujiamini na kuthubutu) which also cause extreme poverty of mind, soul and the pockets robe us ownership and control of our resources.  We tend to work as agents for the big guys out there who own and control us and the resources themselves.  Some of us (leaders) are comfortable to become mercenaries as long us we are paid a token while the owners take the lion share and we are willing to suppress all the human rights for the benefit of our bosses. This is a real challenge which cannot be solved by multiple democracies alone.

Food for thought.

Herment   


From: kerezesia_mukalugaisa@hotmail.com
To: wanabidii@googlegroups.com
Subject: RE: [wanabidii] From Resource Curse to Blessing
Date: Sat, 11 Aug 2012 13:06:45 +0000

What Prof Stiglitz is saying is that you need fully operational competitive multiparty democracies if you are not to turn resource richness into a resource curse.  Defacto one party dictatorships like those in Tanzania and Uganda can only lead to disaster!! Up with M4C!!!
Mwl. Lwaitama
 

Subject: Re: [wanabidii] From Resource Curse to Blessing
To: wanabidii@googlegroups.com
From: kimdr53@gmail.com
Date: Sat, 11 Aug 2012 12:33:58 +0000

Thank you so much for this article it is an eye opener. We hope our Governments are taking note of this!
Sent from my BlackBerry® smartphone from Orange Botswana

From: Abdalah Hamis <hamisznz@gmail.com>
Sender: wanabidii@googlegroups.com
Date: Sat, 11 Aug 2012 13:27:08 +0300
To: <wanabidii@googlegroups.com>
ReplyTo: wanabidii@googlegroups.com
Subject: [wanabidii] From Resource Curse to Blessing

Joseph Stiglitz
06 August 2012
KAMPALA – New discoveries of natural resources in several African countries – including Ghana, Uganda, Tanzania, and Mozambique – raise an important question: Will these windfalls be a blessing that brings prosperity and hope, or a political and economic curse, as has been the case in so many countries?
On average, resource-rich countries have done even more poorly than countries without resources. They have grown more slowly, and with greater inequality – just the opposite of what one would expect. After all, taxing natural resources at high rates will not cause them to disappear, which means that countries whose major source of revenue is natural resources can use them to finance education, health care, development, and redistribution.
A large literature in economics and political science has developed to explain this "resource curse,"and civil-society groups (such as Revenue Watch and the Extractive Industries Transparency Initiative) have been established to try to counter it. Three of the curse's economic ingredients are well known:
  • Resource-rich countries tend to have strong currencies, which impede other exports;
  • Because resource extraction often entails little job creation, unemployment rises;
  • Volatile resource prices cause growth to be unstable, aided by international banks that rush in when commodity prices are high and rush out in the downturns (reflecting the time-honored principle that bankers lend only to those who do not need their money).
Moreover, resource-rich countries often do not pursue sustainable growth strategies. They fail to recognize that if they do not reinvest their resource wealth into productive investments above ground, they are actually becoming poorer. Political dysfunction exacerbates the problem, as conflict over access to resource rents gives rise to corrupt and undemocratic governments.
There are well known antidotes to each of these problems: a low exchange rate, a stabilization fund, careful investment of resource revenues (including in the country's people), a ban on borrowing, and transparency (so citizens can at least see the money coming in and going out). But there is a growing consensus that these measures, while necessary, are insufficient. Newly enriched countries need to take several more steps in order to increase the likelihood of a "resource blessing."
First, these countries must do more to ensure that their citizens get the full value of the resources. There is an unavoidable conflict of interest between (usually foreign) natural-resource companies and host countries: the former want to minimize what they pay, while the latter need to maximize it. Well designed, competitive, transparent auctions can generate much more revenue than sweetheart deals. Contracts, too, should be transparent, and should ensure that if prices soar – as they have repeatedly – the windfall gain does not go only to the company.
Unfortunately, many countries have already signed bad contracts that give a disproportionate share of the resources' value to private foreign companies. But there is a simple answer: renegotiate; if that is impossible, impose a windfall-profit tax.
All over the world, countries have been doing this. Of course, natural-resource companies will push back, emphasize the sanctity of contracts, and threaten to leave. But the outcome is typically otherwise. A fair renegotiation can be the basis of a better long-term relationship.
Botswana's renegotiations of such contracts laid the foundations of its remarkable growth for the last four decades. Moreover, it is not only developing countries, such as Bolivia and Venezuela, that renegotiate; developed countries like Israel and Australia have done so as well. Even the United States has imposed a windfall-profits tax.
Equally important, the money gained through natural resources must be used to promote development. The old colonial powers regarded Africa simply as a place from which to extract resources. Some of the new purchasers have a similar attitude.
Infrastructure (roads, railroads, and ports) has been built with one goal in mind: getting the resources out of the country at as low a price as possible, with no effort to process the resources in the country, let alone to develop local industries based on them.
Real development requires exploring all possible linkages: training local workers, developing small and medium-size enterprises to provide inputs for mining operations and oil and gas companies, domestic processing, and integrating the natural resources into the country's economic structure. Of course, today, these countries may not have a comparative advantage in many of these activities, and some will argue that countries should stick to their strengths. From this perspective, these countries' comparative advantage is having other countries exploit their resources.
That is wrong. What matters is dynamic comparative advantage, or comparative advantage in the long run, which can be shaped. Forty years ago, South Korea had a comparative advantage in growing rice. Had it stuck to that strength, it would not be the industrial giant that it is today. It might be the world's most efficient rice grower, but it would still be poor.
Companies will tell Ghana, Uganda, Tanzania, and Mozambique to act quickly, but there is good reason for them to move more deliberately. The resources will not disappear, and commodity prices have been rising. In the meantime, these countries can put in place the institutions, policies, and laws needed to ensure that the resources benefit all of their citizens.
Resources should be a blessing, not a curse. They can be, but it will not happen on its own. And it will not happen easily.

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Pata nafasi mpya za Kazi www.kazibongo.blogspot.com
Blogu ya Habari na Picha www.patahabari.blogspot.com
 
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Karibu Jukwaa la www.mwanabidii.com
Pata nafasi mpya za Kazi www.kazibongo.blogspot.com
Blogu ya Habari na Picha www.patahabari.blogspot.com
 
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Karibu Jukwaa la www.mwanabidii.com
Pata nafasi mpya za Kazi www.kazibongo.blogspot.com
Blogu ya Habari na Picha www.patahabari.blogspot.com
 
Kujiondoa Tuma Email kwenda
wanabidii+unsubscribe@googlegroups.com Utapata Email ya kudhibitisha ukishatuma
 
Disclaimer:
Everyone posting to this Forum bears the sole responsibility for any legal consequences of his or her postings, and hence statements and facts must be presented responsibly. Your continued membership signifies that you agree to this disclaimer and pledge to abide by our Rules and Guidelines.
 
 

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