Arctic Yearbook 2014 - Page 193

193 Arctic Yearbook 2014 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