Addictive Economies: Extractive Industries and Vulnerable Localities in a Changing World Economy 1

Abstract Raw material extraction once offered an effective route to economic development, but societal relationships with environment and technology have changed so fundamentally that extractive industries today appear more likely to lead rural regions to economic addiction. Key characteristics of addictive activities include rising costs of operation at most extractive facilities, combined with downward trends in world commodity prices. Key characteristics of vulnerable communities and regions include increasing geographic isolation, imbalances of scale and power with respect to extractive industries, and the absence of realistic alternatives for diversified development. Key pressures toward addiction are created by ambiguities that mask the addictive tendencies, including ambiguities of price signals, of employment and development possibilities for remote regions, and of resource exhaustion. The net result is that, while the encouragement to develop extractive industries is often coupled with advice to avoid developing an excessive dependency on a single economic sector, the very regions and nations having the greatest need to hear such advice may also have the lowest realistic ability to respond to it.