Countries that have vast natural resources should ensure that they cast their nets wider in diversifying in other sectors to hold the economies at fort, a US economist has advised.
Mr. Jason Bailey, Director, Kentucky Center for Economic Policy in the U.S says economies should not easily “brush off” the myths on resource curses around the world, citing Kentucky, among the top three coal mining states in the U.S, which has over the decades recorded increased depletion of the resource.
Citing states like Uganda, which is estimated to have about 6.5 billion barrels of oil in the Albertine Graben and with 1.4 billion barrels recoverable, Mr. Bailey said unless economic diversification takes center stage, over reliance on oil could hurt growth of other sectors.
“There are places that are reliant on natural resource and are less prosperous than those who have a more diverse economy. People value what they have even if they see it see it going away…it is a fearful position to be in and that is where Kentucky is currently. It is important that governments focus on heavy investment in other areas,” he emphasised, while speaking to a select group of foreign journalists under the Mid Term Election Tour in Kentucky State.
Coal mining generates 92 per cent of electricity in Kentucky, with the power rates standing at seven cents per kilowatt, the 2nd cheapest in the country. However, over the years, Mr. Bailey revealed that the deposits have dwindled from 120 million tons throughout the 1990s to about 20 million tons in the foreseeable future.
Mr. Bailey also predicted that the tourism industry could be grossly affected if the extraction process is not well handled.
“If you look at mountain communities in other parts of the US where they do not have coal like North Carolina, they are more prosperous because it thrives on tourism. It is hard to develop tourism with all the scarring from the mining. For others, loss of animal and forest-related tourism is bound to occur so governments must find the balance”.
The Kentucky senatorial race has pitted US Senate minority leader and incumbent, Mitch McConell against Democratic challenger Alison Lundergan Grimes, in one of the country’s tightest races in the mid-term elections.
Pundits predict a tough challenge for the Democrats in the largely coal mining state, given that the Obama administration early this year issued stringent regulations to cut carbon emissions from coal producing industries, which employ hundreds of people in the state.