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Capturing the mineral multinationals: advantage or disadvantage?

Published online by Cambridge University Press:  22 May 2009

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Nationalization of the Zairian and Zambian copper industries failed to deliver the hoped for benefits and pushed some still further beyond reach. It did so because nationalization entailed the loss of insulation, that is, the wide range of unperceived risk management and custodial functions fulfilled by the multinational mining corporations. Without this insulation these two governments, their copper industries, and their citizens' welfare all suffered. Looking beyond Zaire and Zambia, it appears that the loss of insulation has negative effects in all cases of mining industry nationalization. The size of the costs are mitigated by the strength of the nationalizer's political system.

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Copyright © The IO Foundation 1983

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References

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63. Ibid. A similar pattern can be observed in the case of Zairianization. Ilunga Ilunkamba reports, for instance, that “‘Zairianization’ of the staff following nationalization dealt with administrative functions, without leading to any appreciable reduction in the total number of technicals. Thus the total complement of employees was increased, without regard to the efficiency of the operation.” “Copper, Technology and Dependence in Zaire: Towards the Demystification of the New White Magic,” Natural Resources Forum 4 (April 1980), p. 149.Google Scholar

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66. In just 29 months, between August 1972 and January 1975, the Gini coefficient for wage distribution among copper industry workers (excluding senior staff) increased from 0.222 to 0.246. Ibid., p. 160.

67. Markakis and Curry note that “localization will undoubtably resolve some issues. But it may also reinforce the constraint posed by the Zambian middle class, which is the primary beneficiary of this process.” Expatriates have been replaced by Zambians with political clout who have been able to demand the continuation of many of the perquisites once used to induce expatriates to stay, such as near-free luxury housing, cars, insurance and pension plans, loans, personal servants, and even a “scarcity allowance.” “Budgetary Politics,” pp. 419–20.

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