1963-2013 - 50 years of Research for Social Change

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Back | Programme Area: Social Policy and Development

Mobilizing Revenues from Extractive Industries: Protecting and Promoting Children’s Rights and Well-Being in Resource-Rich Countries

  • Project from: 2013 to 2014


UNRISD and UNICEF (East Asia and Pacific Regional Office / EAPRO) are collaborating on this policy-relevant research project, which focuses on three Asian countries: Mongolia, Papua New Guinea, and the Philippines.

Research Background and Context

Vast mineral deposits in a number of developing countries present opportunities for economic and social development. Whether this wealth can be harnessed for poverty reduction and social development, including the progressive realization of children’s rights as laid out in the Convention on the Rights of the Child (CRC), depends crucially on the political processes and policy choices that guide the capture and distribution of rents from the extractive sector.

Many developing countries that depend on natural resources such as agriculture or minerals have not been successful in transforming this natural wealth into growth and social development, a phenomenon that has been labeled the “resource curse”. Overcoming this “curse” requires tackling the challenges associated with mineral-led development, in particular price volatility in the commodity sector, management of Dutch disease effects (inflationary pressures and the tendency towards exchange rate overvaluation), productive diversification, as well as distributional and governance challenges. UNRISD research has shown that in mineral-rich countries that performed more successfully, the state played a strong role. These countries used economic policies to provide incentives for productive investment and diversification while safeguarding macroeconomic stability; they showed a willingness and capacity to negotiate and establish consensus between different actors and social groups; and they invested in comprehensive social policies.

A strong developmental case can be made for investing in children in mineral-rich contexts: Children are one key avenue to invest the revenue from the extractive industries (EI) in a strategic and sustainable way. Emphasizing children, and consequently those who constitute our future societies, in national strategies of mineral-led development brings in a long-term consideration to what is ultimately a finite source of national wealth. In this sense, it contributes to inter-generational justice and long-term growth prospects.

Children experience the economic and social environment of their communities differently from adults. For this reason, any negative impacts associated with productive activities or public policies need to be carefully assessed with regard to children, given their greater vulnerability, their specific needs—especially during crucial life stages such as early childhood and adolescence—and the potential implications for their future development. Understanding how EI and mineral-led development impact children’s rights and well-being can in turn guide policymakers in their efforts to minimize harm and maximize benefits, including through equitable investments in social policies for children.

In looking at the impact of EI on children, three issues are of primary concern: mitigating the risks of harmful effects of EI development on children’s rights and well-being; revenue generation for investments in children; and effective and equitable allocation of these resources.

This research project focuses on the latter part: understanding the issues and processes that constitute revenue generation from EI with a focus on the implications for equitable social policies for children.

UNRISD is responsible for the conceptualization and management of the research project. It is closely aligned (in terms of conceptual, thematic and country case research) with the Institute’s ongoing multi-country, multidisciplinary research project, Politics of Domestic Resource Mobilization for Social Development (PDRM), and informed by findings from previous UNRISD research on Social Policy in Mineral-Rich Countries.

Project Objectives
The UNRISD-UNICEF research collaboration has multiple objectives: to contribute to knowledge creation and institutional learning processes within the partner organizations; to bring knowledge to national and international debates about channeling revenues from mineral extraction towards social policy and investments in children; and to examine public finance mechanisms, economic and social policies, and political conditions that are conducive to this end.

More specifically, it aims to:
  • advance knowledge and understanding of the linkages between extractive industries and public policies as they relate to children’s rights and well-being in Mongolia, Papua New Guinea, and the Philippines; and
  • advance knowledge and understanding of the political processes and institutions that impact on revenue mobilization in Mongolia, Papua New Guinea, and the Philippines.

Project Deliverables

Research Paper 1: Extractive Industries and the Financing of Child-Inclusive Social Development
UNRISD will commission three research papers on Extractive Industries and the Financing of Child-Inclusive Social Development. One paper will be commissioned on each of the following countries: Mongolia, Papua New Guinea, and the Philippines.

The paper will analyse the linkages between the extractive sector and public policy as it relates to children’s rights and well-being. The paper will provide information on the general fiscal performance of the country and the specific contribution of the mining sector to the budget. In order to assess the impact of mineral-led development strategies on children, the paper will also provide data and simulations as the basis for an impact analysis on children’s well-being and equity (impact on household income, impact on child labour, impact on child-relevant social services and infrastructure, impact on the environment, etc.). The paper will formulate policy recommendations in terms of public finance mechanisms and related public policies for channeling mineral rents into investments for children.

Key questions to be addressed:
  • What are the main characteristics of the extractive sector in the country? What role does the mineral sector play in the overall development strategy of the country?
  • What are the economic challenges associated with mineral extraction in the country and what public policies are in place (or envisaged) to address these issues, such as equity? Are benefits focused in specific geographical areas?
  • What is the socioeconomic impact of EI at the community/household level? What are specific effects on children?
  • What is the impact of EI on fiscal revenues (also in comparison with other revenues such as aid and tax revenues)? Are there mechanisms to channel the revenues for social sectors most pertinent to children (e.g., health, education, social welfare, child protection)?

Methodology
Analysis of available macroeconomic data, including forecasts related to EI and evolution of fiscal revenues; analysis of child development indicators; analysis of micro-data sets for impact analysis; qualitative research (interviews, press articles, literature reviews) on development strategies, public policies, impact of EI on communities and social groups.


Research Paper 2: The Political Economy of Mineral Resource Governance and Children’s Rights
UNRISD will commission three research papers on The Political Economy of Mineral Resource Governance and Children’s Rights. One paper will be commissioned on each of the following countries: Mongolia, Papua New Guinea, and the Philippines.

The paper will focus on the political economy of resource extraction and rent distribution as it affects children’s rights and well-being. It will analyse the political processes associated with domestic revenue mobilization (negotiations with different actors, e.g. investors, donors and civil society; social mobilization around EI) including mineral rent capture and distribution. The role of the state in managing the socioeconomic and environmental impact of extractive industries entails putting in place mechanisms to build consensus between various actors (including private actors) and social groups with competing needs and interests. The analysis should provide data and information to assess whether participating actors represent child interests, directly or indirectly, or whether and how children are affected by political processes related to revenue generation from EI (within the process and through process outcomes). The paper will identify relevant actors and the changing relationships between them, as well as institutional development.

Key questions to be addressed:
  • What are the political processes associated with EI and related fiscal policies? Domestic resource mobilization generates conflicts over types of resources to be mobilized (taxes, resource rents etc.), who pays, who and what is exempted, how much should be paid, and how the resources collected should be allocated across sectors, groups and communities. What is the nature of resource bargains, types of resources and social programmes involved in bargains; trade-offs among competing programmes and resources, and resource yields?
  • How are children, their families and communities affected by political process of bargaining/negotiating around the extractive industries? What consultation mechanisms are in place and how effective are they? Are there immediate issues resulting in household displacements? Are there mitigation measures put in place by the state (such as cash-transfers or other social protection schemes funded from the state revenues from the extractives, or compensation schemes)?
  • Are there changes in key relationships, for example a redefinition of state-citizen, state-investor or state-donor relations and does this have an impact on social development and child rights?
  • Is resource mobilization linked to institutional development? Are social delivery agencies upgraded in response to (i) popular mobilization around fiscal issues and rent distribution, and (ii) institutional reforms related to economic governance of the extractive sector/economic institutions?

Methodology
Qualitative research (e.g. press articles, literature reviews, including grey literature, review of key policy documents, key informant interviews, group-focused interviews); conceptual framework specifying internal and external drivers of reform in the country context, process tracing and stakeholder mapping.

Publications

Mongolia
Philippines
Papua New Guinea

Related Outputs
In 2014, UNRISD also ran a competition inviting young scholars to submit original and innovative think pieces on the theme of extractive industries and development. The winning submissions are available for download on the UNRISD website: