SUSTAINABLE DEVELOPMENT IN MINERAL EXPORTING ECONOMIES

Sustainable development requires that consumption by present generations should not be at the expense of future generations. For mineral economies this means substituting an alternative income source for the depleting mineral asset and curbing environmental degradation. But Dutch disease (the negative symbiosis between the mining and other tradable sectors which mutes both the rate and efficiency of economic growth) can subvert both sustainability goals. First, Dutch disease weakens the non-mining tradables sector so that it cannot propel the economy should mining be marginalized. Second, Dutch disease retards economic growth so that investment in environmental management and clean technology is slow and environmental damage is the greater. Sustainable development must therefore overcome Dutch disease and this requires a pragmatic orthodox macroeconomic policy. The latter mutes the damaging impact of fluctuating ore revenues and spurs competitive diversification and economic growth so that new investment and the rapid adoption of environmentally sensitive technology is facilitated.