Minerals and Economic Growth

Myers, John G. ; Barnett, Harold J. ; Vogely, William A.
Organization: Society for Mining, Metallurgy & Exploration
Pages: 15
Publication Date: Jan 1, 1985
INTRODUCTION, CONCEPTS, AND MEASUREMENT Introduction Periods in the history of man, from his earliest appearance to the present, are often characterized by the principal materials used. In nearly all cases, the material or fuel is of mineral origin-stone, copper, bronze, iron, coal, and so forth-indicating the principal ingredient of the tools or source of power of the period. Each of these periods represented great improvement over the preceding one in terms of human well-being, as measured by population growth and other indicators (Cipolla, 1978). A major reason for the improvements in production and well-being was the nature of the material or fuel, each successively superior to the preceding, which made it possible to produce more food, fuel, shelter, and clothing with a given amount of labor. If we accept this well-documented description of economic progress as accurate, we may then turn to the consideration of two related questions concerning this development. The first, easily answered,-is why man spent long periods of time (millenia, in many cases) making tools from inferior materials, such as copper, instead of passing directly to superior materials, such as iron and steel. The second, closely related question, concerns the relation between the rate of economic growth and the quantity of mineral reserves available at any time. For the first question, the answer is that the technology required to discover, extract, and process each successive material had to be discovered and developed before the material could be used. Once the technology was available, the new material could be and was exploited widely, raising productivity-output per unit of labor- and consequent consumption per person. This familiar idea underlies a fundamental principle of the economics of resources, namely, at any time, available resources depend upon available technology. No mineral or other raw material is a resource unless the technology has been developed to utilize it. But once the technology is at hand, the new resources associated with it provide the means for economic growth and rising levels of living. This principle is subject to certain conditions. For example, governments or other institutions may prevent a mineral from being used, even though the technology is available. And, if a mineral is located in a remote place, transportation charges may make it uneconomic to exploit. Such minor qualifications do not, however, change the thrust of the argument that technology is the overriding determinant. With respect to the second question, it might seem apparent that the greater the quantity of reserves available, up to some point, the more economic growth will be facilitated. This line of reasoning leads to the conclusion that as re- serves are consumed the quantity available will be reduced and economic growth will eventually be restrained. Reasoning of this sort underlies much popular (and scholarly) thought, in which depletion of mineral and other resources is assumed to lead to constraints on economic growth, through higher materials costs and absolute limitations on materials use. Two important qualifications must be made to this explanation, however, which together
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