In a recent article published in the Journal of Conflict Resolution, I answer this question by developing a formal model of the interactions among a natural resource firm, a local community and a government. The model provides a theory of the local politics of natural resource extraction.
Why should we care about these regions, and why is it necessary to have a theory just about them? The obvious answer is that we’d like to avoid some local version of the natural resource curse where natural resources coincide with violent conflict and low socio-economic development (recent works by Arellano-Yanguas, Arce, Arce and Miller, and Haslam and Tanimoune[ii] have paved the way for a closer look at a local resource curse). Having a generalizable theory about these regions can help us understand if and when such a local curse is likely to emerge.
But natural resource extractive regions are interesting for another reason: these are areas where tradeoffs between government access to revenue and political support are particularly acute. The fixed and somewhat random nature of natural resource deposits makes them particularly vulnerable to costly protest. The potential of costly resistance shapes the strategic incentives of the extractive firm and the state, and compels the state to manage tradeoffs between access to resource revenue and potential political consequences of resistance where natural resources and a politically relevant population occupy the same space. These regions reflect the outcome of a strategic interaction among a firm who may provide local goods and services to avoid costly protest, a government who may value the resource revenue provided by the firm more than any political support it might receive from engagement in the region, and a local population with the potential to offer support or impose costs on the firm or the state.
For a clear representation of this interaction, take a look at the figure.
So a theory of the local politic of natural resource extraction has implications for a broader question that has received little attention in the literature in comparative and world politics: how do non-state actors affect governance outcomes at the subnational level? The model tells us when a non-state actor, in this case an extractive firm, has incentives to provide goods and services in a defined region. It also outlines how a government can benefit from ensuring that such an actor does so. The government can thus leverage the potential costs of protest to the firm in order to garner regional support resulting from goods provision in the region.
Understanding extractive regions as strategic contexts in this way provides a lens for understanding subnational governance outcomes more broadly. The model allows us to explore how and why regions of limited state presence[iii] might be sustained, with specific reference to regions of natural resource extraction where we might most expect states to maximize their presence, given the revenue potential.
[i] Cernea, Michael M. 2000. “Risks, Safeguards and Reconstruction: A Model for Population Displacement and Resettlement.” Economic and Political Weekly, 3659–3678.
[ii] Arellano-Yanguas, Javier. 2011. “Aggravating the Resource Curse: Decentralisation, Mining and Conflict in Peru.” The Journal of Development Studies 47 (4): 617–38. doi:10.1080/00220381003706478.
Arce, Moisés, and Rebecca E. Miller. 2016. “Mineral Wealth and Protest in Sub-Saharan Africa.” African Studies Review 59 (3): 83–105. doi:10.1017/asr.2016.84.
Arce, Moises. 2014. Resource Extraction and Protest in Peru. University of Pittsburgh Press.
Haslam, Paul Alexander, and Nasser Ary Tanimoune. 2016. “The Determinants of Social Conflict in the Latin American Mining Sector: New Evidence with Quantitative Data.” World Development 78 (February): 401–19. doi:10.1016/j.worlddev.2015.10.020.
[iii] Krasner, Stephen D., and Thomas Risse. 2014. “External Actors, State-Building, and Service Provision in Areas of Limited Statehood: Introduction.” Governance 27 (4): 545–67. doi:10.1111/gove.12065.