Challenging the race to the bottom thesis: evidence from sub-Saharan Africa’s gold mining industries

Stream: Panel 63 - International Relations: Foreign Direct Investment and Elections in Africa 
Date: Wednesday, 28 September 2016
Time: 9.00 am – 10.30 am

Abstract

Multinational mining firms are often accused of engaging in a race to the bottom; that is, driving down regulatory standards in developing states by locating operations in jurisdictions with the weakest regulations. The existence of this ‘race’ raises serious normative concerns about business behaviour, the role of the state in the face of global capital and the rights of citizens of mineral-rich states. This paper examines the existing globalisation debate on the race to the bottom thesis. It makes an intervention in this scholarship by positing that this ‘race’ is not taking place in the gold mining industry. It points to the unique characteristics of commodity extraction and instead argues that mining firms can enhance the level of governance in mineral-rich states. The paper employs a qualitative methodology utilising elite interviews with mining firm executives and industry representatives and content analysis of firms’ reporting. Through this analysis, it demonstrates that a particular type of firm actually engages in a race to the top within the extractives sector. Firms that are likely to enhance the governance of their sector are those that are large, powerful and operate across multiple jurisdictions. They are able to set the regulatory agenda and form rules and regulations to govern their industry. It is also argued, however, that the governance engendered by these firms is unlikely to address local-level issues such as environmental or community concerns and that these firms’ contribution to the governance of mineral-rich states should be viewed cautiously in this light.

Author

Ainsley Elbra (Presenter), University of Sydney
Dr Ainsley Elbra is an international political economy researcher. Her work on private governance as a solution to Africa’s resource curse, the power of finance post-GFC and the political economy of multinational tax avoidance has been published in journals including Business and Politics and Resources Policy. Her book, 'Governing African Gold Mining: Private governance and the resource curse' is currently in press with Palgrave Macmillan.

She was awarded the 2015 Australian International Political Economy Network's Richard Higgott Journal Article Prize and the 2014 International Political Studies Association’s Stein Rokkan Award for best graduate paper at the IPSA World Congress.