According to the resource curse literature, resource-abundant countries or regions have lower rates of growth as compared to resource-scarce countries or regions. Different explanations have been given to explain the phenomenon. The ‘Dutch disease’ explanation derives its name from the Dutch economy’s poor growth performance after the discovery of oil in that country. This low rate of growth has been attributed to sloth or laziness in resource-abundant counties. Other theories explaining the poor performance of resource-rich countries are corruption, lack of institutional development and conflict. Corruption in a resource-abundant country leads to the loot and plunder of resources, with the result that the local population is unable to enjoy the fruits of these resources. And since institutions like an independent judicial system are unavailable, the loot and plunder of resources continues. It is not just a coincidence that mostly resource-abundant countries are prone to conflict, which may be internal due to resentment and a sense of exclusion in the local population against the exploitation of their resources by outsiders. Or, it may be due to greedy outsiders who go and invade other countries under different pretexts, couched in altruistic cloaks. But inside the smokescreen the scramble for oil, gas, precious metals and stones in less developed countries goes on.
In an earlier study, I found that the rate of GDP growth of resource-scarce countries at 2.96 percent was higher than the rate of growth of top oil and gas exporting countries at 2.05 percent and the rate of growth of ore- and mineral-rich countries at 2.70 percent during the 1980s. But, contrary to what the theory tells us, the rate of growth of resource-scarce countries at 3.50 percent was far below the rate of growth of the top oil and gas exporting countries at 4.68 percent and the rate of growth of mineral- and ore-rich countries at 3.89 percent during the 1990s. The same trend continued during the 2000 decade, with natural resource-scarce countries’ GDP increasing at the annual average rate of 3.78 percent, compared with the GDP growth rate of 5.23 percent for top oil and gas exporting countries and 4.30 percent for ore- and mineral-rich countries.
But the performance of individual countries may not necessarily follow this trend. Pakistan, for example, appears to be afflicted by the resource curse even today. And all the causes for the resource curse like the Dutch disease, dysfunctional institutions, rent seeking and conflict are taking their toll. The situation in Balochistan is the same as in other-mineral rich parts of Pakistan, where 80 percent of the precious stones are lost in extraction and the 20 percent that are extracted are exported to India where they are cut and polished, enabling India to earn precious foreign exchange. India was thus able to buy armaments worth $ 100 billion last year by just adding value to Balochistan’s precious stones. We have heard a lot about the economic exploitation of Balochistan by Punjab and Pakistan but the exploitation of Balochistan by India is never mentioned by anyone even in passing. The fact that 80 percent of Balochistan’s precious stones are lost in a bid to extract them and export them to India in raw form, while India makes a fortune by cutting and polishing the remaining 20 percent is criminal injustice to the poor people of Balochistan.
Gold and copper are also found in abundance in Balochistan. The Tethyan Copper Company (TCC) was awarded a lease for the exploration of 400 square kilometers in Reko Diq, where the identified reserves are worth $ 104 billion in only six to seven kilometers. Exploitation of these reserves would yield precious metals worth trillions of dollars for the Baloch people. The TCC submitted a feasibility for only three kilometers after 18 years but since the company did not meet the legal requirements of the government of Balochistan, they were not granted a mining lease. The plan designed by the TCC to be implemented over a life of almost 60 years would have siphoned off billions of dollars in revenue and profit, with no economic benefits accruing to Balochistan. In spite of this dismal performance, Dr Malik’s government wants to award the contract to the TCC again. One fails to understand why the Balochistan government would want to award the contract to a company that could not deliver in 18 years and has a very tainted reputation? How many people in Balochistan know about their exploitation by an Australian company?
(To be continued)
The writer is a senior professor of IBA and is now working at CBM as the dean of faculty