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USING NATURAL REOURCES FOR BROAD-BASED DEVELOPMENT:
HOW CAN THE OECD HELP?
Dr. Lahra Liberti
Senior Adviser on Natural Resources
OECD Development Centre
Key points
• OECD Development Centre in a nutshell
• Main findings of the thematic chapter of the 2013 edition of the African Economic Outlook on “Structural transformation and natural resources in Africa” (in cooperation with AfDB, UNDP and ECA)
• OECD Policy Dialogue on Natural Resource-based Development
• The creation of the OECD Development Centre was proposed by US President John F. Kennedy in an address to the Canadian Parliament in Ottawa on 17 May 1961.
• Its objective is to help decision makers in both OECD and partner countries to find policy solutions to stimulate growth and improve living conditions in developing and emerging economies.
• Unique place within the OECD and the international community with 41 member countries. The World Bank, the African Development Bank and the International Monetary Fund are all observers. The European Union also takes part in the work of the Governing Board.
What is the OECD Development Centre?
41 countries, of which 24 are OECD members and 17 are developing and emerging economies.
Argentina
Iceland
Poland
Austria
India
Portugal
Belgium
Indonesia
Romania
Brazil
Ireland
Senegal
Cape Verde
Israel
Slovakia
Chile
Italy
South Africa
Colombia
Republic of Korea
Spain
Costa Rica
Luxembourg
Sweden
Czech republic
Mauritius
Switzerland
Dominican Republic
Mexico
Thailand
Egypt
Morocco
Turkey
Finland
Netherlands
United Kingdom
France
Norway
Vietnam
Main findings of 2013 AEO : Structural transformation and natural resources in Africa
• Natural resources are Africa’s comparative advantage: taking together agricultural commodities, timber, metals and minerals, and hydrocarbons, natural resources have accounted for 35% of Africa’s growth since 2000.
• Resource-based raw and semi-processed goods accounted for 80% of African export products in 2011, compared with 60% of Brazil, 40% in India and 14% in China.
Improved terms of trade have contributed to growth by strengthening resource sectors
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Ind
ex 2
00
5=
10
0
Energy Agriculture Metals & Minerals
Africa GDP World GDP
Source: World Bank, authors' calculations
The global natural resource boom: Africa's exports benefited but processed goods did not lose out
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Afr
ica
n e
xp
or
ts i
n U
SD
bil
lio
n
(co
ns
tan
t 2
00
0 p
ric
es
)
ProcessedgoodsRawcommoditiesNot-specified
Source: COMTRADE, authors' calculations, see annex for a note on methodology
7
Africa is back on the map for international investment
• The high level of prices, the growing global demand for raw materials and new discoveries of mineral and energy resources create a window of opportunity for Africa’s broad-based development.
• This requires policy makers to analyse the obstacles to structural change and draw lessons from countries that have built on their natural resource wealth to chart a long-term sustainable growth path
More Diversification is Necessary Natural resources can be used to turn obstacles into opportunities
High-
skill
Services
Manufacturing
(elevator promise)
Limiting Factors:
Political instability, low-skill labour abundance;
learning processes; inadequate infrastructure;
productivity hurdles like small markets, access to
finance, labour costs and poor public services
Comparative
Advantage
in
Natural Resources
Low
skill-
to-land
ratio
A 4-layer policy approach to harnessing natural resources for structural transformation
10
Public Services
(Infrastructure,
education)
Layer 1: Laying strong foundations
11
Access
to Finance &
Markets
Regulations & Transparency
Government Capacity &
Accountability
Layer 2
Rules for
exploration
& exploitation
Layer 2: Creating a favorable environment
for resource sectors to thrive
12
Availability
of relevant
inputs
Resource-
specific
Skills
Resource-
specific
Infrastructu
re
Land Mgmt.
&
Ownership
Layer 1
Layer 3
Energy needs for metal refining & Africa’s
generation capacity
Country
2009 Electricity production (GWh)
2009 Energy need for refining of mining production (GWh), (bauxite, iron, copper and nickel only)
Energy requirement of base metal refining as share of total electricity output
Botswana 444 2,996 675%
Tanzania 4,628 2,583 56%
Congo, Dem. Rep. 7,830 7,738 99%
Zimbabwe 7,878 411 5%
Ghana 8,958 8,800 98%
Zambia 10,308 15,946 155%
Algeria 42,769 6,600 15%
Egypt, Arab Rep. 139,000 7,200 5%
South Africa 246,815 336,991 137%
Africa* 664,051 764,210 115%
Layer 3: Natural Resources: Managing the
Challenges and Opportunities
14
Managing the impact on
communities & environment
Managing
Expectations
Optimising
revenue
resources
Managing
Revenues
and
Volatility
Layer 2
Layer 4
Layer 4: Pushing Structural
Transformation
15
Focusing on
Agricultural
Productivity
Building
Capabilities
Layer 3
Creating
Viable
Linkages
16
0%
10%
17%
21%
21%
52%
52%
55%
62%
0% 20% 40% 60% 80%
Trade barriers in countries of export destination
Lack of monitoring and positive/negative sanctions fornon-compliance with policies
Enclave mentality of resource companies
Lack of conducive policy framework
Others
Insufficient infrastructure (transport,utilities,telecommunications)
Insufficient skill base and lack of innovation
Low relative competitiveness of local suppliers /processors
Technological complexity of resource production /limited local capacity to enter value chains
Share of African countries in %
Source: AEO country experts survey
Obstacles to linkages
• What: policy dialogue on natural resource-based development aims to identify under what conditions and how natural resources can play a transformative role and have a multiplier effect on the local economy.
• Who: 15-20 OECD and partner resource-rich countries participating on an equal footing.
• How: Leveraging OECD’s comparative advantage: build capacity in policy making, using OECD consolidated peer-learning and peer-review methodologies.
• Approach: search for common ground among participating countries on areas of shared interest/common challenges; mutual understanding of countries’ objectives, opportunities and constraints and learning from successful experiences and mistakes.; facilitate convergence of efforts making the most of existing initiatives
• Intermediary and ultimate outputs: thematic peer-reviews and comparative analysis eventually leading to operational frameworks (“how to “ thematic guides)
OECD contribution to harnessing natural resource potential for broad-based development and inclusive growth
• Common understanding of challenges faced by participating countries as well as building common ground on workable approaches through peer-learning and experience-sharing;
• Enabling participating countries to design policies in line with their specific priorities and objectives;
• Improving resource-rich countries’ ability to receive an enhanced share of revenues and use them to best promote broad-based development;
• identifying ways to strategically coordinate with the private sector to design win-win situations and achieve mutually beneficial outcomes, including through market driven processes.
Expected benefits
Using OECD instruments as
transformational tools for development
On the ground, it is estimated that at 600 mine sites in the DRC and Rwanda, industry programmes to implement the Guidance have enabled some 45,000 artisanal miners – who provide support for 225,000 dependants - to bring the minerals they dig to the legitimate market.
The UN Group of Experts on the DRC also reports that private sector due diligence efforts in the DRC and Rwanda have resulted in increased government revenues and improved government capacity to monitor the mineral sector and produce reliable data on mineral extraction and trade
