Embracing natural resources

Primitive to sublime

The world in which we live is full of natural resources and the economics around them can bring many pleasant and regrettable memories. From the Arctic to Antarctica, nature’s bounty abounds though not always in ways that we cherish. Natural resources like bauxite, gold, iron, silver, phosphates and uranium, for example, are not readily visible to the naked eye since many are holed up in the crust of the earth. We find some of resources too in the depths of the streams, lakes, rivers, and seas, as well as in the forests, the swamps and grasslands.   Science has made them known to us. Like the material below the ground, the forests and waterways are there for our use and serve as feeding troughs for the animals, birds, fish, insects and reptiles with which we share the planet. Technology has made natural resources available to us in natural and modified form and has enabled man to change many things of nature to his own liking. These very offerings have helped mankind to transform his life from the primitive to the sublime. The entire process from extraction to consumption helps to define progress, measure wealth and determine one’s station in life.

Negative connotation

Very often, when conversations about natural resources arise, the world is invariably divided into two parts, developed and developing, for convenient analysis. Placement into one category or the other is determined by economic criteria such as level of per capita GDP, extent of dependence on natural resources or level of industrialization, and extent of innovation. An economic contrast is often made between manufactures and primary commodities and whenever the ratio of manufactures to commodity significantly favours manufactures, countries are thought of as developed. In addition, most developing countries depend on one or two natural resource products to earn income. They struggle with providing access to potable water, healthcare, good sanitation, and education for their people. They tend to have poor infrastructure in most of the country. These are things that are identified with poverty and deprivation. As a result, dependence on natural resources tends to carry a negative connotation.

Nothing demeaning

Yet, there is nothing demeaning about being a natural resource producer. The ‘Who’s Who’ of natural resources contains nearly as many developed countries as developing countries. Of the 10 countries thought to be the most resource rich, four are developed countries. At the top of the list is Russia which is reported to have US$75.7 trillion worth of natural resources. It obviously has many different types of natural resources including gold, but its current worth is built on the vast amounts of timber, natural gas and oil reserves that it possesses. The total resource value of the USA, which is the second largest, is estimated at US$45 trillion while Canada, the holder of the fourth spot has total reserves of US$33.2 trillion. The other developed country is Australia, which occupies the eighth spot and has total natural resource reserves to the tune of US$19.9 trillion. Australia has the most gold and uranium in the world.

 Primitive to sublime

The world in which we live is full of natural resources and the economics around them can bring many pleasant and regrettable memories. From the Arctic to Antarctica, nature’s bounty abounds though not always in ways that we cherish. Natural resources like bauxite, gold, iron, silver, phosphates and uranium, for example, are not readily visible to the naked eye since many are holed up in the crust of the earth. We find some of resources too in the depths of the streams, lakes, rivers, and seas, as well as in the forests, the swamps and grasslands.   Science has made them known to us. Like the material below the ground, the forests and waterways are there for our use and serve as feeding troughs for the animals, birds, fish, insects and reptiles with which we share the planet. Technology has made natural resources available to us in natural and modified form and has enabled man to change many things of nature to his own liking. These very offerings have helped mankind to transform his life from the primitive to the sublime. The entire process from extraction to consumption helps to define progress, measure wealth and determine one’s station in life.

Negative connotation

Very often, when conversations about natural resources arise, the world is invariably divided into two parts, developed and developing, for convenient analysis. Placement into one category or the other is determined by economic criteria such as level of per capita GDP, extent of dependence on natural resources or level of industrialization, and extent of innovation. An economic contrast is often made between manufactures and primary commodities and whenever the ratio of manufactures to commodity significantly favours manufactures, countries are thought of as developed. In addition, most developing countries depend on one or two natural resource products to earn income. They struggle with providing access to potable water, healthcare, good sanitation, and education for their people. They tend to have poor infrastructure in most of the country. These are things that are identified with poverty and deprivation. As a result, dependence on natural resources tends to carry a negative connotation.

 Nothing demeaning

Yet, there is nothing demeaning about being a natural resource producer. The ‘Who’s Who’ of natural resources contains nearly as many developed countries as developing countries. Of the 10 countries thought to be the most resource rich, four are developed countries. At the top of the list is Russia which is reported to have US$75.7 trillion worth of natural resources. It obviously has many different types of natural resources including gold, but its current worth is built on the vast amounts of timber, natural gas and oil reserves that it possesses. The total resource value of the USA, which is the second largest, is estimated at US$45 trillion while Canada, the holder of the fourth spot has total reserves of US$33.2 trillion. The other developed country is Australia, which occupies the eighth spot and has total natural resource reserves to the tune of US$19.9 trillion. Australia has the most gold and uranium in the world.

Leading exporters

World trade also offers a way to determine the importance of natural resources to a country. The World Trade Organization often classifies countries of importance to world trade by identifying them as leading exporters or leading importers. In a publication which shows the 15 leading exporters of natural resources as at 2008, eight developed countries were among them. These countries were Australia, Canada, Germany, Netherlands, Norway, Russia, United Kingdom and the United States of America. These countries accounted for about 60 per cent of the natural resource exports of the top 15 exporters and nearly one-third of total global trade in natural resources. The seven non-industrialized countries that are leading exporters of natural resources are all oil producers. The 15 leading exporters account for 52 per cent of total natural resource exports. The foregoing information reveals some very interesting things in the global natural resource schema. Despite the negatives of natural resources, such as price volatility and negative environmental effects, several major industrialized countries depend on them. Also with oil producers being so dominant, it means that the rest of the world is making small contributions to global resource extraction and trade.

 Something interesting

So, depending on natural resources is nothing to scoff at as the experiences of Australia and Canada show. These two countries are leading exporters of natural resources and depend on them more than manufactures for the greater part of their earnings. Australia, for example, is the world’s leading producer of bauxite and iron ore; the second largest producer of alumina, lead and manganese; the third largest producer of brown coal, gold, nickel, zinc and uranium; the fourth largest producer of aluminium, black coal and silver; and the fifth largest producer of tin.   The mining industry’s contribution to the Australian economy has been placed at $121 billion a year. In terms of export income, it generates $138 billion per annum, which represents 54 per cent of total goods and services.

There is something interesting about the Australian experience and its natural resources. It can be thought of as having turned its dependence on natural resource into a core competence. As a consequence, Australia not only exports raw materials, it also exports mining technologies and services and is considered the world’s top supplier of such technologies and services. Australia contends that at least 60 per cent of the mines in the world operate with Australian-made and designed software. It points out that dependence on natural resources does not have to be a disadvantage. It reminds us too that economic diversification does not have to be brought about solely by forward linkages to the processing of raw materials into finished goods. Economic diversification could be brought about also by taking the knowledge of the industry and creating backward linkages to improve the efficiency of resource inputs and increase industry competitiveness.

Building a competitive edge

The natural resource sector is a key driver of Canada’s economy and accounts for as much as 20 per cent of its output. Canada has the third largest proven oil reserves in the world. And according to official sources, the natural resource sector provides 10 per cent of the jobs in the country. Like Australia and others before it, Canada realizes that value added could be realized through both backward and forward linkages. As such, much emphasis continues to be placed on research that supports sustainable forest management and adaptation to a changing climate. Unlike Australia which has captured a niche export market in mining technologies, Canada might still be concentrating on building a competitive edge by introducing innovations in its own domestic industries. Its pulp and paper mills have become more innovative, diversified efficient and competitive. They have been able to reduce their greenhouse gas emissions by more than 10 per cent. The mills have also increased their renewable power by more than 200 megawatts. Success in this area has also made it possible for some mills to make excess power available to local communities.

Research activities

This brings one to what happens in Guyana where both our agriculture and mining activities are important to the economy. They provide the bulk of our foreign reserves. Data is not currently available but agriculture and mining probably provide the bulk of employment in the country as well. Research work is being done at the Rice Research Station, the National Agricultural Research and Extension Institute (NAREI) and the Institute of Applied Science and Technology (IAST). NAREI has been in existence for several decades now notwithstanding the recent modification to its name, and so has been the IAST. Over the years, NAREI has engaged in research on a variety of topics and continues to do so. Very little is known publicly of how its research work has changed agricultural production and the impact that it has had on the sector’s competitiveness. While some of the work reaches farmers through extension services, this is not enough to achieve economic diversification.

The IAST was established in 1977 with the intention of developing and adapting appropriate technologies that would enable producers to utilize Guyana’s natural resources. The work of the institute is more focused on the industrial and commercial sectors of Guyana and seeks to develop and maintain links between industry and some of the research activities that it undertakes. Research quite often carries some amount of secrecy to avoid loss of knowledge to competitors. The impact of the work of the IAST on the natural resource sector is still to be fully felt. Knowing what successful research could do for economic diversification and competitiveness, Guyana needs to place more emphasis on research activities. It is seen as the best route to achieving sustainable value-added in the natural resource sector.

World trade also offers a way to determine the importance of natural resources to a country. The World Trade Organization often classifies countries of importance to world trade by identifying them as leading exporters or leading importers. In a publication which shows the 15 leading exporters of natural resources as at 2008, eight developed countries were among them. These countries were Australia, Canada, Germany, Netherlands, Norway, Russia, United Kingdom and the United States of America. These countries accounted for about 60 per cent of the natural resource exports of the top 15 exporters and nearly one-third of total global trade in natural resources. The seven non-industrialized countries that are leading exporters of natural resources are all oil producers. The 15 leading exporters account for 52 per cent of total natural resource exports. The foregoing information reveals some very interesting things in the global natural resource schema. Despite the negatives of natural resources, such as price volatility and negative environmental effects, several major industrialized countries depend on them. Also with oil producers being so dominant, it means that the rest of the world is making small contributions to global resource extraction and trade.

 Something interesting

So, depending on natural resources is nothing to scoff at as the experiences of Australia and Canada show. These two countries are leading exporters of natural resources and depend on them more than manufactures for the greater part of their earnings. Australia, for example, is the world’s leading producer of bauxite and iron ore; the second largest producer of alumina, lead and manganese; the third largest producer of brown coal, gold, nickel, zinc and uranium; the fourth largest producer of aluminium, black coal and silver; and the fifth largest producer of tin.   The mining industry’s contribution to the Australian economy has been placed at $121 billion a year. In terms of export income, it generates $138 billion per annum, which represents 54 per cent of total goods and services.

There is something interesting about the Australian experience and its natural resources. It can be thought of as having turned its dependence on natural resource into a core competence. As a consequence, Australia not only exports raw materials, it also exports mining technologies and services and is considered the world’s top supplier of such technologies and services. Australia contends that at least 60 per cent of the mines in the world operate with Australian-made and designed software. It points out that dependence on natural resources does not have to be a disadvantage. It reminds us too that economic diversification does not have to be brought about solely by forward linkages to the processing of raw materials into finished goods. Economic diversification could be brought about also by taking the knowledge of the industry and creating backward linkages to improve the efficiency of resource inputs and increase industry competitiveness.

 Building a competitive edge

The natural resource sector is a key driver of Canada’s economy and accounts for as much as 20 per cent of its output. Canada has the third largest proven oil reserves in the world. And according to official sources, the natural resource sector provides 10 per cent of the jobs in the country. Like Australia and others before it, Canada realizes that value added could be realized through both backward and forward linkages. As such, much emphasis continues to be placed on research that supports sustainable forest management and adaptation to a changing climate. Unlike Australia which has captured a niche export market in mining technologies, Canada might still be concentrating on building a competitive edge by introducing innovations in its own domestic industries. Its pulp and paper mills have become more innovative, diversified efficient and competitive. They have been able to reduce their greenhouse gas emissions by more than 10 per cent. The mills have also increased their renewable power by more than 200 megawatts. Success in this area has also made it possible for some mills to make excess power available to local communities.

Research activities

This brings one to what happens in Guyana where both our agriculture and mining activities are important to the economy. They provide the bulk of our foreign reserves. Data is not currently available but agriculture and mining probably provide the bulk of employment in the country as well. Research work is being done at the Rice Research Station, the National Agricultural Research and Extension Institute (NAREI) and the Institute of Applied Science and Technology (IAST). NAREI has been in existence for several decades now notwithstanding the recent modification to its name, and so has been the IAST. Over the years, NAREI has engaged in research on a variety of topics and continues to do so. Very little is known publicly of how its research work has changed agricultural production and the impact that it has had on the sector’s competitiveness. While some of the work reaches farmers through extension services, this is not enough to achieve economic diversification.

The IAST was established in 1977 with the intention of developing and adapting appropriate technologies that would enable producers to utilize Guyana’s natural resources. The work of the institute is more focused on the industrial and commercial sectors of Guyana and seeks to develop and maintain links between industry and some of the research activities that it undertakes. Research quite often carries some amount of secrecy to avoid loss of knowledge to competitors. The impact of the work of the IAST on the natural resource sector is still to be fully felt. Knowing what successful research could do for economic diversification and competitiveness, Guyana needs to place more emphasis on research activities. It is seen as the best route to achieving sustainable value-added in the natural resource sector.