The extractive industries are strategic components of the economy of all Amazonian countries, but their importance varies greatly. Mineral extraction creates tangible economic benefits for a sovereign state. Converting a non-renewable natural resource into money can provide an emerging economy or middle-income country with much-needed financial capital for infrastructure development and poverty reduction. The resource exploitation generates foreign earnings essential for providing citizens with the goods and services that are not produced by the domestic economy. Unfortunately, many, or perhaps, even most, resource-rich countries of the Global South suffer from corruption, poor governance and adverse social conditions that impede sustainable investment of extractive wealth. Mineral and hydrocarbon rents originating in the Pan Amazon, stratified by country (top) and commodity type (bottom). Values underestimate the economic impact of the mineral sector, because ‘rents’ are net revenues after the cost of production, which can vary between 30% to 70% of gross revenues. The cost of production is spent domestically, while rents are shared by the state (taxes) and producers (profits). Data source: World Development Indicators (The World Bank), modified by data from national ministries. Macroeconomic realities The Pan Amazon is a massive reservoir of mineral resources, and extractive industries represent a large component of the regional GDP (see Chapter 1). The combined importance of the mineral sector varies among countries, ranging from a high of almost 25 per cent in Venezuela, to just a bit more than two per cent for Brazil. Mining has long dominated the natural resource sector in Peru,…This article was originally published on Mongabay
The post State management and regulation of extractive industries in the Pan Amazon first appeared on EnviroLink Network.