Extractive Industries

Non-renewable mineral resources play a dominant role in 81 countries, which collectively account for a quarter of world GDP, half of the world’s population and nearly 70% of those in extreme poverty. At the domestic level, if managed properly, the revenues from extractive industries can have a substantial impact on income and prosperity while respecting community needs and the environment.

A number of characteristics are particular to the extractive industries: the uneven distribution of natural resources across regions and countries coupled with the high capital intensity of the industry with long development lead times and extraction life cycles; the principle of permanent sovereignty over natural resources combined with the ability (or not) to mobilize domestically the significant long-term investments required to exploit such resources; and the exhaustibility of natural resources with sustainability concerns revolving around issues such as land, human, or cultural rights, as well as environmental and health considerations. These characteristics are often at the root of the various tensions arising between investors, the host country, local communities, and the home state of the investing company or other importing countries.

Given the heavily traded nature of fuels and minerals, international trade and investment frameworks have a central role to play in ensuring that trade in natural resources effectively results in transformative development and inclusive growth, while simultaneously providing fair and predictable access on global markets for countries that rely on such resources.

As a contribution to this debate, the E15 Expert Group on Trade and Investment in Extractive Industries, jointly convened by ICTSD, the World Economic Forum, and the International Institute for Sustainable Development (IISD), started by identifying major sustainable development challenges and opportunities in the sector that could be effectively addressed through trade and investment governance frameworks. It then assessed the adequacy of the global trade and investment system to respond to these emerging challenges, and suggested policy options and possible reforms to manage them more effectively.