Pitfalls and Pipelines - Philippine Indigenous Peoples Links

Chapter 2.2: Challenges at the National Policy Level
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should behave towards mining companies, and high up the list
was the need to review mining regulations. The next year of
codes was launched in the next year. 14 This led to a huge “rush
to the bottom” in terms of providing tax breaks and incentives
for companies, which is still pretty much the dominant model
of development for extractive industries.
It is noteworthy, however, that since the financial crisis,
there has been a shift in power relations between companies
and governments. Rising commodity prices have seen growing
profits for the companies, and questions as to whether
the “legal owners” of the resources (i.e., in their view, governments)
are receiving enough benefits. Nationalization is
still—with a few notable exceptions, such as South Africa and
Bolivia 15 —off the agenda. Many countries, however, have been
talking about, or actually changing, their mining revenue laws
to increase potential revenues. Examples of such countries
include ones as diverse as Australia, Brazil, Guatemala, and
Mongolia. 16
Such acts still fit with the overriding concern of states
to maximize revenues. The key question that is often asked
around extractive industries, however, is how much the nation
really benefits from such revenues. The contentious issue of
exploitation of oil, gas and minerals often leading to lower
than expected levels of national economic growth is known
as the “resource curse.” It basically revolves around concerns
such as a potential deterioration of terms of trade of manufacturing
goods against primary commodities and exchange rate
appreciation (known collectively as “Dutch disease”), revenue
volatility from extraction, the “enclave” nature of the extractive
industries, and an increase in corruption, weak governance
and conflict. 17
Whether a country can develop based on its resources
seems to depend on a number of interrelated factors. It is clear
that some countries are less prone to the resource course than
others, with oft-quoted positive examples, including Botswana
and Chile (and allegedly in the early days of their development,
Australia and the United States). 18 The Oxford University academic
Paul Collier has created a Natural Resources Charter,
which attempts to debate a set of principles for governments