Conference News: Social Policy in Mineral-Rich Countries

Why do some mineral-rich countries channel their resources into sustainable economic and social policies, while others do not? What are the factors that impede resource-rich countries in the South from investing more of their wealth in social development? Can boosting mineral rents open fiscal space for transformative social policies in a context that is also conducive to democracy, social inclusion and economic development? These are some of the questions that form the backbone of a research project on “Financing Social Policy in Mineral-rich Countries”, which is part of the second stage of a broader project UNRISD initiated in 2006 on “Financing Social Policy” (see CN 18 2007). The umbrella project, funded by the Ford Foundation, explores the developmental impact associated with specific financing techniques and revenue resources such as taxation, social insurance contributions, social and pension funds, remittances, aid and the topic of concern for this Conference News, mineral rents.

In 2007, UNRISD commissioned eight papers on the theme of financing social policy through mineral rents, which included four conceptual papers and four case studies on Norway, Chile, Indonesia and Nigeria. These papers were presented during a two day workshop held in Geneva on 24-25 April 2008. The workshop brought together the commissioned authors as well as academics and experts from the United Nations, which included staff from the International Labour Organization (ILO) and the United Nations Conference on Trade and Development (UNCTAD).

In his opening remarks, UNRISD director Thandika Mkandawire introduced the research programme on social policy in a development context. This programme is built on the recognition that social policy has multiple roles which go beyond social protection and poverty reduction simultaneously affecting production, redistribution, and gender as well as state-society relations. He explained that the key role social policy plays in terms of economic development, social cohesion and democratization has been shown in research UNRISD conducted on late-industrializing countries like the Nordic countries, East Asia and Latin America. In this research it also became clear that the financing question had to be tackled successfully in order to build sustainable development models. He further expressed that one of the main purposes of the workshop was to share experiences between countries and to give room for cross-disciplinary discussions on development, welfare regimes and democratization.

Katja Hujo followed with an overview presentation on the research project. She noted that in a context of globalization, states’ capacities to raise revenues had been undermined by processes like trade and capital account liberalization, labour market problems like unemployment and increasing informality, income and asset concentration and persistent debt problems. At the same time, there was a growing need for social policies in order to compensate for the social costs produced by market volatility and economic crises, to provide income support to increased numbers of unemployed and excluded people and to manage processes of demographic and social change. At the time the conference took place, the global economy had not yet been struck by the economic and financial crisis that started in late 2008 and the international context still presented some positive features such as low interest and inflation rates and high commodity prices, which Hujo characterized as windows of opportunity for developing countries. Describing the links between mineral wealth and social development, she referred to the issue of human resources, the enclave nature of the mining industry and regional income and wage disparities, concerns about fragmentation of national social systems through the creation of privileged schemes for mining employees, problems of armed conflict financed by mineral rents, the relationship between the mining industry and migration and effects of the sector and related policies on gender and family structures.