Large-scale projects to enhance development

1. Large-scale projects to enhance development 1. Dams positive effects: - meets demand for electricity for industries and housholds - no CO2 emissions - more irrigation more food production - prevention of flooding - water reservoir for cities - more jobs in rural areas negative effects: - people are forced to leave their land and homes - loss of farmland - flooding of historic sites - loss of natural habitats and species - restricted migration of fish -change of microclimate

2. 2. Exploitation of resources (Stiglitz: "The resource curse") • natural resources (oil, diamonds, gold and other metals) problems: - MNCs pollute the land and don't pay for the damage - destruction of other jobs, e.g. dangerous run-offs destroy fishing waters - most of the profit goes to MNCs • agricultural products Immanent problem with all big projects: corruption e.g. – tropical wood – roses from Africa – palm oil – Victoria perch problems: – indigenous people lose their livelihood (forced displacement/loss of land/biodiversity) poverty and hunger – less arable land for food production imports? – dependence on foreign investors and capital – dependence on only one crop – dangers of monocultures: • decreasing yields • heavy use of pesticides • contamination of ground water – loss of rain forests: negative impact on world climate – erosion of soils

3. possible advantages: - growth of GDP  problem: uneven distribution of new wealth (disparities remain) - higher tax revenues: can be used for improved education and health care facilities etc. - more jobs in the manufacturing sector and on plantations/fishing sites etc.

4. How can the "resource curse" be fought? - state-owned companies (possibly as joint ventures) can keep the wealth in the country  successful cases: - Malaysia (oil) - Chile (copper), with stabilization fund - Russia Putin era - Norway (oil), with stabilization fund - Botswana (diamonds), with stabilization fund - stabilization funds: help to stabilize the economy in case of price slumps (volatility of prices of natural resources) - setting up of independent institutions to fight corruption - exploiting resources must result in good investments for the future otherwise: once the resources are gone, the country will be poorer (not sustainable) instrument: accounting framework with depreciation of assets (resources)  Green Net National Product (Green NNP) destructive IMF accounting: "countries get good marks if they reduce their deficits by cutting down forests etc. at a fraction of the full value"  also: IMF only accounts debts without regarding investments

5. - "Extractive Industries Transparency Initiative":  no tax deduction for payments to foreign governments without disclosure of what was paid and how much the resource was extracted - reduction of arms sales - certification:  diamonds: no uncertified "conflict diamonds" (certificate of origin from the government)  tropical wood - limiting of financial assistance to countries that sell their resources below value (why should taxpayers here pay for such bad management?) - setting norms: some international body (e.g. World Bank) could check/survey contracts of MNCs with DCs to make sure DCs get better value for their resources - MNCs must guarantee for any environmental damage they cause - effective enforcement of all these measures