The Role of the Extractive Sector in Expanding Economic Opportunity

Abstract

Resource extraction fuels the global economy. It also contributes substantially to the national economies of countries from which the oil, gas, and minerals are derived. While the macroeconomic impact of extractive sector operations is significant and usually, if not uniformly, positive, the microeconomic impact of extraction enterprises is even more uneven, and in many cases could be greatly enhanced if companies adopted more explicit policies and practices to expand economic opportunity along their value chains. In 2007, energy and mining companies made up six of the 10 largest companies in the world, and five of the 10 most profitable - with ExxonMobil topping the list as the world's most profitable company.' However, the communities from which these companies extract commodities are among some of the poorest. Economic opportunity does not flow directly and evenly from multinational extractive companies to those closest to and most affected by their business activities. And given the fact that over the next 20 years, approximately 90% of new hydrocarbon production will come from developing countries, the gap between company profits and local economic benefits could widen?