200
WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3
TA B L E 6 .1
Projects in extractive industries are capital intensive and create few jobs
Country Papua New Guinea Mongolia Botswana Papua New Guinea Mozambique Tanzania Namibia Zambia Pakistan Peru
Project (sector or resource) LNG Project (natural gas) Oyu Tolgoi (copper, gold) Jwaneng Cut 8 Project (diamonds) Ramu Mine (nickel) Benga Mining (coal) Mchuchuma (coal) Husab Mine (uranium) Lumwana Mine (copper) Reko Diq Mining (copper, gold) Conga Mine (gold)
Investment, % of 2010 GDP 237.0 74.2 20.2 19.0 13.6
Direct employment, number 9,300 during construction; 1,000 afterward 14,800 during construction; 3,000 to 4,000 afterward 1,000 5,000 during construction; 2,000 afterward currently 150; 4,500 afterward
12.2
5,000
11.9
5,200 during construction; 1,200 afterward
9.3
4,700 during construction
4.0 2.6
2,500 during construction; 200 afterward 6,000 during construction; 1,700 afterward
Source: World Bank Development Report 2013 team based on project information. Note: GDP = gross domestic product; LNG = liquid natural gas.
tics services. But overall, in the Gulf states, national citizens have become direct beneficiaries of the oil bonanza through well-paid jobs in the public sector. In the larger countries, these jobs are rationed, with some groups, such as women and youth, having less access than those with good connections. Menial jobs are performed by immigrants on temporary contracts who receive modest pay and benefits. Jobs are a window to rent sharing for some but do not give a stake in society to others. This tension between jobs for productivity and jobs for social cohesion may be even more difficult to avoid in developing countries, because they lack the institutional strength of Norway or the implementation capacity of the United Arab Emirates. In resource-rich developing countries, the concern is not only about losing competitiveness in tradable sectors but also about missing out on the benefits of urbanization. Indeed, the price of land in major agglomerations becomes prohibitively high in resourcerich developing countries. By one measure, the most expensive city in the world is Luanda (table 6.2). According to this measure, 3 of the top 5, and 9 of the top 50 most expensive cities in the world are in resource-rich developing countries. Because they do not have the economic density of London, New York, or Tokyo, cities in
resource-rich developing countries find it difficult to reap the benefits of agglomeration. Specialization in the production of commodities (including agricultural products such as cocoa) may be an important reason why urbanization has failed to deliver growth in countries in Sub-Saharan Africa.40 These wealthy consumption agglomerations are nonetheless attracting rural migrants, thereby fueling local inequality, discontent, and crime. None of the cities in resource-rich developing countries among the top 50 in the world according to cost of living is among the top 50 according to quality of life. While extractive industries fail to create many jobs, they do contribute to the local economy through other channels. A recent survey of employees of large-scale mining projects in Papua New Guinea shows that they make remittances both in kind and in cash to their households. Most remittances in kind were for construction and building materials (41 percent), followed by transport-related items (28 percent).41 Cash contributions were used most often for school fees (29 percent) and transportation-related items (12 percent). Employees also reported accommodating relatives visiting from rural areas. Some of their guests helped with housework, and some obtained education at the host’s expense.42