Digging Up Wealth: How Important is Mining to an Economy?
Taking a look at the economies of other countries in the current world can help shine a light on how certain industries play a role in the rapidly changing economy of the Information Age. To help get a broader view of the issue, we will look at two countries with very different outlooks that happen to possess strong mining industries: South Africa and Australia.
South Africa (Estimated 2011 GDP of US$408 billion)
Mining is the biggest reason why South Africa is one of the richest nations in Africa, possessing the largest GDP on the continent and placing it in the top 10 for GDP per person. The country is among the top exporters in the world for close to twenty different minerals, the list including important materials such as diamonds, gold, coal, and platinum. Gold has always been an important mining product, and many of the minerals South Africa exports are used in the IT and scientific communities. The mining industry makes up nearly a fifth of the GDP for the country.
While the mining industry combines with tourism to make South Africa relatively wealthy for the region, it still lags significantly behind the major world powers. The quality of life has been steadily increasing in South Africa and the shadow economy is less prominent than it is in other African nations. The fact that South Africa is not progressing more is due to lingering inequalities from its segregation policies, high crime levels, emigration of skilled workers to countries like the US and UK, rampant unemployment, and the influence of foreign corporations that account for much of the mining business. The issues can be viewed as quite detrimental, but when compared to other countries in the region, like Madagascar, it can be said that the prevalent mining industry elevates South Africa from a third-world status.
Australia (Estimated 2012 GDP of US$1.57 Trillion)
The overall comparison between Australia and South Africa is interesting due to their mining sectors making up equal portions of their GDP. Both countries also have significant impacts on the gold and coal markets, but the key difference is the scale between the two. For example, where South Africa produces around four percent of the world’s coal, Australia produces nine percent. Australia also produces around 150 percent of the gold South Africa does. The one area where South Africa has a distinct advantage is diamond production.
As we go from the Australian mining sector to the overall economy, it is easy to see that Australia’s economy is stronger, but the difference is not entirely due to mining. There is less economic disparity, less crime, and immigration to Australia occurs for more reasons than the mining economy. Australia is seen as a smaller world power whereas South Africa is still considered a developing nation. Both countries are significantly better off than their neighbors.
How Much Depth Does Mining Add to an Economy?
The overall conclusion that can be drawn is that an abundance of natural resources available for mining can make a large impact on the wealth of a nation, and having more resources is always good. It can also be said that a strong mining industry is not enough to fully counteract other environmental factors or weaker secondary and tertiary economies. Mining can be viewed as a grain or vegetable in the food pyramid: A healthy economy requires a good amount of it, but it is not the only thing it needs to have.
Article donated by Hydralok. They provide swaging and crimping machines to distributors around the world.