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provide resource revenues. The next step in this shift in political alliance is to focus tax and
regulatory holidays, fiscal subsidies, and other benefits on the resource sector, further depriving
people of the attention and benefits usually associated with progressive democratic governance.
In their recent study of resource development and governance, Humphries, Sachs, and Stiglitz
conclude that easy access to significant resource revenues enables governments of resource-rich
countries to ignore the fact that ‘human capital investment is an essential part of wealth creation.’ As
they explain: ‘When states start relying on natural resources wealth, they seem to forget the need for
a diversified and skilled workforce that can support other economic sectors once resource wealth
has dried up’ (2007: 10). As a result, education, gender equality, labour productivity, and other key
economic factors become less important to those formulating development policies, even when
qualified administrative and regulatory personnel are essential to democratically representing long
term local interests and economic diversity.
Detailed studies have identified the negative effects of this ‘crowding out’ process. Karl relates
government budgetary reliance on resource rents to lessening concern with issues of tax fairness,
accountability, transparency, and sustainable economic development – even more so in the wake of
the 2008-9 economic crisis – and has found strong relationships between the size of domestic oil
reserves to poor ratings on international governance and human development indicators. Some of
the factors she has flagged include falling per capita incomes; increasing reliance on temporary
foreign workers; reduced spending on health, education, and social development; authoritarian and
repressive methods of dealing with heightening social tensions; and political ‘splitting’ tactics that
exploit geographic and political differences.
Least developed countries are at greatest risk in this developmental dynamic. But no country can
afford to ignore the risks of resource revenue dependence: oil and other natural resources in the
ground are part of their common wealth, part of the physical capital of the country. When resources
or rights are sold, those revenues become like the proceeds of sale of a capital asset, such as a home
or a business. These are revenues that cannot come again.
For a country to direct its development heavily in the direction of resource revenues means that
when those resources run out, the country will have to begin anew to then develop the social,
political, cultural, and developmental practices that will not only enable it to fill the resulting revenue
gap, but will also maintain stability as people, communities, and regions redevelop themselves.
Solutions to the ‘Paradox’ and Promotion of Sustainable Equalities
The Arctic and northern regions of circumpolar states contains the world’s largest pools of valuable
fossil and mineral deposits (Duhaime & Caron 2008: 17). With sparse populations to lay claim to
this wealth, international investment companies rushing to exploit it, and a burgeoning world
population demanding ever more energy and raw materials, the governance issue posed by this
situation is which model of economic development and use of resource revenues might be best, if
resource revenues there will be?
Gender Challenges & Human Capital in the Arctic