Up to $1 trillion in mineral resources discovered in Afghanistan

[John Dibble]

US discovers $1 trillion in untapped mineral deposits in Afghanistan

Afghanistan has up to $1trillion (£690bn) worth of untapped mineral resources which could revolutionise the country's economy and perhaps even the war, American officials have said.

The country has long been known to harbour huge deposits of copper and iron, but the scale of resources is now believed to be far larger than previously thought.

Huge seams of cobalt, gold and iron could turn Afghanistan into a world centre for mining, US officials hope.

Afghan officials believe the mining sector will eventually become the backbone of the now tiny Afghan economy and provide hundreds of thousands of jobs.

The economy is currently dominated by aid money and drug smuggling, raising fears the coalition's investments in building the Afghan army and state are ultimately unsustainable.

A thriving mining economy offers the chance of much-needed funding to the Afghan state, but would also need years to build up the infrastructure needed.

"There is stunning potential here," Gen David Petraeus, commander of the United States Central Command, told the New York Times. "There are a lot of ifs, of course, but I think potentially it is hugely significant."

Afghanistan's mineral wealth was mapped by the Soviets during the 1980s, but was never exploited.

Continue...

[J. J.]

The could be so rich that the could afford to import opium.

[phk]

I can see a classic textbook case of "Dutch disease" for 2030s Econ Development textbooks.

[ilikeverin]

Oh yay!

[phk]

Oh yay!

Or something blood diamond-esque

[??????????]

To bad their to ignorant with their tribalism to rally around that fact and improve their society.

[phk]

To bad their to ignorant with their tribalism to rally around that fact and improve their society.

Natural resources are a curse.

[dead0man]

To bad their to ignorant with their tribalism to rally around that fact and improve their society.

Natural resources are a curse.

Only to people suffering under a backwards culture.

[phk]

To bad their to ignorant with their tribalism to rally around that fact and improve their society.

Natural resources are a curse.

Only to people suffering under a backwards culture.

Most examples of the Dutch Disease do not occur in backwards cultures.

In fact its arguable that the Japanese WWII culture could be considered backwards and they would be the last country to fall for it for obvious reasons (the dearth of natural resources). It could be minimized if corruption is curtailed but it still exists.

They can occur anywhere by distorting incentives that lead to short sighted decisions. Distorted incentives being how incremential, marginal investments in natural resources crowd out growth generating traded goods production.

Surely you do not consider the likes of Australia and Canada backward.

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http://www.res.org.uk/economic/freearticles/january06.pdf

On page 2 as you can see the regression results.

The regression for the total sample of 42 countries in panel

(a) gives a correlation of R^2 = 0.11 and a significant slope of -6.15. The regression for the 21 countries with worst institutional quality in panel

(b) gives an R^2 of 0.35 and a significant slope of -8.46. The regression for the 21 countries with the best institutional quality in panel

(c) gives an R2 of 0.00 and a insignificant slope of -0.92.

The countries in panel (b) are numbered as follows: 1 Bolivia, 2 El Salvador, 3 Guyana, 4 Guatemala, 5 Philippines, 6 Uganda, 7 Zaire, 8 Nicaragua, 9 Nigeria, 10 Peru, 11 Honduras, 12 Indonesia, 13 Ghana, 14 Zambia, 15 Morocco, 16 Sri Lanka, 17 Togo, 18 Algeria, 19 Zimbabwe, 20 Malawi, 21 Dominican Rep.

The countries in panel (c) are numbered as follows: 1 Tunisia, 2 Tanzania, 3 Madagascar, 4 Jamaica, 5 Senegal, 6 Gabon, 7 Ecuador, 8 Costa Rica, 9 Venezuela, 10 Kenya, 11 Gambia, 12 Cameroon, 13 Chile, 14 Ivory Coast, 15 Malaysia, 16 South Africa, 17 Ireland, 18 Norway, 19 New Zealand, 20 Belgium, 21 Netherlands.

[dead0man]

I'll note that 12 of those 22 (most) are "backwards" (of course that's subjective) and add that that is some mighty fine cherry picking there.  Where are all the places that didn't go to sh**t because of natural resources?  And even looking at the ones listed, are you suggesting Canada would be better off without oil in Alberta?

Of course a sudden shot of money in a place where having money isn't normal can be a shock to the system (see many pro athletes or lottery winners), but clearly not all people/peoples handle it the same way.  Some do better than others.  Culture plays a part in how it works out.

[phk]

I'll note that 12 of those 22 (most) are "backwards" (of course that's subjective) and add that that is some mighty fine cherry picking there.  Where are all the places that didn't go to sh**t because of natural resources?  And even looking at the ones listed, are you suggesting Canada would be better off without oil in Alberta?

Which 12 do you consider backwards?

I only counted 8.

I'll note that 12 of those 22 (most) are "backwards" (of course that's subjective) and add that that is some mighty fine cherry picking there.  Where are all the places that didn't go to sh**t because of natural resources?  And even looking at the ones listed, are you suggesting Canada would be better off without oil in Alberta?

Like I'v said before if oil is taking away workers from the tradable goods sector than natural resources are crowding out more productive industries.

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It all goes to the steady state in the LR equilibrium.

Btw. Many first worlders do fall for bubbles.  Especially with the Sun Belt and the housing bubble in the 2000s.

[dead0man]

Which 12 do you consider backwards?

All of them not in Europe or N.America....plus Russia.

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I don't understand how job creation can be a bad thing, shouldn't that raise the price of labor?  Isn't that good for the working man?  Yeah, sh**t will cost more for the working man but nobody seems to mind this when we're talking about raising the minimum wage.

I'm not arguing that bubbles are good, I'm arguing that having a lot of natural resources doesn't have to be a bad thing and the local culture plays a large part in whether or not it ends up a net positive or not.

[phk]

Another reason to not fall for resource dependence, especially considering how liquid and volatile futures markets are, given they are primarily used for hedging risk.

[dead0man]

I'm not arguing a nation should rely on one resource either (or resources in general, trade is very good)...especially one that isn't sustainable....but maybe I'm missing your point.

[phk]

Which 12 do you consider backwards?

All of them not in Europe or N.America....plus Russia.

You must be logged in to read this quote.

I don't understand how job creation can be a bad thing, shouldn't that raise the price of labor?  Isn't that good for the working man?  Yeah, sh**t will cost more for the working man but nobody seems to mind this when we're talking about raising the minimum wage.

I'm not arguing that bubbles are good, I'm arguing that having a lot of natural resources doesn't have to be a bad thing and the local culture plays a large part in whether or not it ends up a net positive or not.

Well here goes.

1.) What about Australia or New Zealand? If all non-European based cultures are backwards, I'd like to know why they don't qualify.

2.) What economists are concerned about is the opportunity cost and what you are potentially giving up. Focusing on natural resources is primarily a dead end, while focusing on developing tradable goods can potentially help create greater returns to capital, especially in a poor country. One road in the US reduces congestion while it causes a whole new market to open up in Cameroon.

Falling prey to a price bubble is not fruitful since many private companies and other state-owned companies in other sector will likely want to capitalize on that which would depress the price (the incentive is there and its happened to OPEC). Suddenly you realize you have too much labor allocated for one and not the other. Similar to how the sun belt had excess workers in real estate during the bubble days.

[dead0man]

..and you've officially lost me.  I think you're reading a lot more into what I'm saying than what I'm actually saying.  I'm not talking bubbles, I'm talking natural resources (yes I know having a lot of the latter can lead to the former).  Again, I'm not arguing that bubbles are good, I'm arguing that having a lot of natural resources doesn't have to be a bad thing and the local culture plays a large part in whether or not it ends up a net positive or not.  That's it.  I'm not an econmist (duh ), I did take a macro economics class at community college 15 years ago but I think the only thing I learned was what "macro" meant.

[bgwah]

Great, now they can pay us back.

[phk]

..and you've officially lost me.  I think you're reading a lot more into what I'm saying than what I'm actually saying.  I'm not talking bubbles, I'm talking natural resources (yes I know having a lot of the latter can lead to the former).  Again, I'm not arguing that bubbles are good, I'm arguing that having a lot of natural resources doesn't have to be a bad thing and the local culture plays a large part in whether or not it ends up a net positive or not.  That's it.  I'm not an econmist (duh ), I did take a macro economics class at community college 15 years ago but I think the only thing I learned was what "macro" meant.

I think these people presented it better than I did.

http://en.wikipedia.org/wiki/Resource_curse

[opebo]

To bad their to ignorant with their tribalism to rally around that fact and improve their society.

Natural resources are a curse.

Only to people suffering under a backwards culture.

Most examples of the Dutch Disease do not occur in backwards cultures.

In point of fact one may say that natural resources are a net negative to developed industrial economies, while the case is not so clear in very underdeveloped ones.