The institutional environment of extractive industries as a driver of sustainable development in resource-driven economies

Abstract

Many resource-driven economies (RDE) of low- and middle-income countries are in captivity of the “resource curse”, which is usually associated with the presence in the country of natural reserves of metals, minerals, oil, gas. For several decades, macroeconomic and institutional theories have differently explained why resource dependence in most countries leads to weak economic growth and poverty. Numerous hypotheses and econometric studies expand knowledge about the phenomenon of the resource curse, but the problem for many countries with RDE remains unresolved. In the last 7-8 years prevails the opinion that mining can help countries with RDE to enter the trajectory of sustainable growth. But for this it is necessary to improve the quality of national institutions. It remains unclear how to stimulate a positive transformation of the institutional environment of a resource-dependent economy. The idea of the work is to focus on changing the institutional environment of the extractive industries, and not on the country’s economy as a whole. This approach has been little studied, but its application in the context of the Sustainable Development Goals (SDGs, 2015-2030) can help increase the contribution of the extractives sector to the sustainable development of a country with RDE and low or middle income. Institutionalization of international sectoral initiatives, introduction of international standards and best practices into the institutional environment of the national extractives sector will have a stimulating effect. For responsible investors, the environmental dimension of sustainability is becoming increasingly important.