Di Boscio, Nicolas
(2010)
Mining enterprises and regional economic development: an exploratory analysis of the sustainable development model.
PhD thesis, London School of Economics and Political Science.
Abstract
Towards the end of the 1990s, and in response to increasing global condemnation, the
mining industry adopted sustainable development (SD) principles and standards
through corporate social responsibility (CSR) initiatives. This approach not only
proposed a dramatic change in the operating practices of large mining houses, but
also suggested a grand vision for the industry as a long term catalyser of local
economic growth. This research now investigates the effect that mining enterprises
which operate under these principles have on sub-national economic development. In
doing so, it undertakes multiple case-study analysis, focussing on a single firm, Rio
Tinto, and covers three of its subsidiary companies at various stages of development.
Consistent with claims by mining advocates, this work confirms the frequently
striking importance that large mines have for sub-national economies. However, this
investigation disagrees with the emphasis typically attributed to each stream of
benefits and brings attention back to the use that mining cash flows are put to. More
generally, the study argues that the potential for large mining firms to trigger
endogenous growth has been underestimated. On the one hand, these enterprises can
contribute distinctly to local capital accumulation; on the other, under certain
circumstances, they can also help sustain increases in local productivity
endogenously. Indeed; while local preconditions will determine socioeconomic
outcomes to a significant degree, mining companies can play a critical part in
economic planning and the building of innovative institutions, which could, in turn,
help increase the underlying local rate of technological absorption, human capital and
overall capacity for economic governance. This entails a drastic (and controversial)
change from the role previously assumed by companies. Yet, this study also
concludes that, in some other cases, SD has promoted unattainable economic
expectations. In these cases, minimising the local impact of mining would be a more
advisable economic strategy.
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