From Colonial Extractivism to Neo-Extractivism: A Modern Resource Curse?

Neo-extractivism, while aiming to allocate resource revenues to social welfare, often perpetuates detrimental cycles of exploitation and extraction. Despite reformist intentions, neo-extractivism can lead to severe social and environmental issues as seen in countries like Honduras and Ecuador.

by Samriddhi Gupta

The extractivist economic model took hold, lasted through centuries of colonialism, and continues to influence contemporary policies. Historically, many countries endowed with abundant natural resources have failed to capitalize on them and have even performed poorly compared to others with limited resources. This has been described as the “paradox of plenty” or “resource curse” [1]. 

The global North has primarily benefited from extractivism (and now neo-extractivism), which involves large-scale extraction to meet the needs of colonial and neocolonial powers [2]. Despite contemporary efforts to reform this model through increased state intervention, many resource-dependent nations continue to struggle with economic instability, environmental degradation, and social inequality [3]. Even with a shift in policy towards neo-extractivism, resource extraction persists, degrading land and causing social harm to indigenous communities. 

Defining Neo-Extractivism

The term “extractivism“, derived from the Latin word “ex-tractum,” refers to the extraction of raw materials. It is often linked to economic models and industries, such as mining, that focus on large-scale resource extraction and export. In contrast, “neo-extractivism” signifies a development strategy in which the revenues generated from the export of these products are reinvested in social development within the source country [4].

Neo-extractivism refers to the policies implemented by certain left-leaning Latin American governments that rejected neoliberal measures like privatization and monetary orthodoxy yet turned to extractivist activities to fund social reforms [5]. These governments have adopted post-neoliberal strategies, regulating resource appropriation and export through nationalization, contract renegotiation, and increased export duties and taxes. The government directs this surplus revenue towards enhancing social structures and promoting growth. The primary goal is to ensure political stability, diversify local economies, increase social participation, reduce poverty, and secure national development and sovereignty [6].

The Pitfalls of Neo-Extractivism

In the past two decades, “neo-extractivism” has emerged as a contemporary approach to resource extraction. While it claims to deviate from the conventional extractivist model, it remains deeply rooted in the exploitation of natural resources and communities. The patterns of resource extraction and exploitation that were established during the colonial era continue to persist, even though neo-extractivism is more significantly influenced by the state than the private sector-driven extractivism [7].

Although state involvement can lead to welfare distribution, the core issues of environmental degradation and social displacement remain largely unaddressed [8].

Case Studies of Neo-Extractivism

  1. The Garifuna Experience in Honduras

In Honduras, Indigenous and Black communities suffered in both social and environmental contexts as a result of neo-extractivist policies on land use. The Garifuna, a diasporic group historically displaced multiple times, are now facing extreme challenges because of neo-extractivist projects such as mining, power plants, and tourism developments. These actions, promoted as being in the national interest, have led to the criminalization, violence, and forced displacement of Garifuna people from their ancestral lands. [9]

Even though the state maintains that these programs contribute to development, they have actually done a lot more harm than tangible economic benefits. Foreign investors and the state perceive the Caribbean coast as underutilized, which has resulted in further Garifuna displacement [10]. This situation is indicative of a bigger pattern of abuse, exploitation, and racialized policies that perpetuates the cycle of poverty, displacement, and marginalization [11].

  1. The Yasuni-ITT Initiative in Ecuador

Under President Rafael Correa, Ecuador implemented a neo-extractivist strategy by expanding the state’s control over the mining and hydrogen industries with the objective of utilizing the generated revenue to finance social welfare programs. In 2007, Ecuador created the Yasuni-ITT initiative to preserve substantial hydrocarbon reserves in Yasuni National Park in exchange for international financial compensation. This initiative reflected Ecuador’s dedication to environmental preservation and sustainable development [12].

Nevertheless, the initiative was ultimately unable to secure the requisite funding to preserve the land, and the government announced its intention to continue oil exploitation in the Yasuni region in 2013. This decision provoked substantial controversy and opposition, as it jeopardized the livelihoods of indigenous communities and one of the most biodiverse regions on Earth. The Yasuni-ITT case is a prime example of the inherent tension in neo-extractivism between economic development and environmental conservation, highlighting the limitations of state-led extractive models in attaining genuinely sustainable outcomes [13].

Conclusion

Neo-extractivism continues to degrade the environment and cause social displacement that it aims to move away from. The states of Honduras and Ecuador clearly demonstrate that, despite the initial goal of reinvesting the generated revenue in the social and economic development of the communities, the approach remains far from its intended objective. The ongoing challenges and limitations of state-led resource models reinforced the call for more effective policy and strategies to balance economic development with social and environmental sustainability.

References:
[1]  Mehlum, H., Moene, K., & Torvik, R. (2017). The paradox of plenty: A meta-analysis. World Development, 91, 248-259. accessed at: https://doi.org/10.1016/j.worlddev.2017.01.009 on Aug 16, 2024.
[2] Acosta, A. (n.d.). Extractivism and Neoextractivism: Two sides of the same curse. Transnational Institute. accessed at: https://www.tni.org/files/download/beyonddevelopment_extractivism.pdf on Aug 29, 2024.
[3]Ibid.
[4] Burchardt, H.-J., & Dietz, K. (2014). (Neo-)extractivism – A new challenge for development theory from Latin America. Third World Quarterly, 35(3), 468-486. Taylor & Francis, Ltd, accessed at:  http://dx.doi.org/10.1080/01436597.2014.893488 on Aug 15, 2024.
[5] Fernando, A. L., & Brewster, T. (2016). Chapter 22. In A. L. Fernando & T. Brewster (Eds.), Handbook of research on transitional justice and peace building in turbulent regions (pp. xx-xx). IGI Global.
[6] Burchardt, H.-J., & Dietz, K. (2014). (Neo-)extractivism – A new challenge for development theory from Latin America. Third World Quarterly, 35(3), 468-486. Taylor & Francis, Ltd, accessed at:  http://dx.doi.org/10.1080/01436597.2014.893488 on July 17, 2024.
[7] Svampa, M. (2019). Neo-extractivism in Latin America: Socio-environmental conflicts, the territorial turn, and new political narratives. In Cambridge Elements: The Politics of Development. Cambridge University Press. accessed at:  https://doi.org/10.1017/9781108752589 on Aug 29, 2024.
[8] Warnecke-Berger, H., Burchardt, H.-J., & Dietz, K. (2023). The failure of (neo-)extractivism in Latin America – explanations and future challenges. Third World Quarterly, 44(10), 1825-1843. accessed at: https://doi.org/10.1080/01436597.2023.2203380 on Aug 29, 2024.
[9] Castillo, Rony L. (2019) “Leave or Die: Neoextractivism and the Garifuna Experience in Honduras.” Cultural Anthropology, accessed at: https://culanth.org/fieldsights/leave-or-die-neoextractivism-and-the-garifuna-experience-in-honduras on July 17, 2024.
[10] Hale, C. R. (2011). Resistencia para que? Territory, autonomy and neoliberal entanglements in the ‘empty spaces’ of Central America. Economy and Society, 40(2), 184-210. accessed at:  https://doi.org/10.1080/03085147.2011.548947 on July 17, 2024
[11] Castillo, Rony L. (2019) “Leave or Die: Neoextractivism and the Garifuna Experience in Honduras.” Cultural Anthropology, accessed at: https://culanth.org/fieldsights/leave-or-die-neoextractivism-and-the-garifuna-experience-in-honduras on July 17, 2024.
[12] Finer, M., Moncel, R., & Jenkins, C. N. (2010). Leaving the oil under the Amazon: Ecuador’s Yasuní-ITT Initiative. Conservation Biology, accessed at: https://doi.org/10.1111/j.1744-7429.2009.00587.x on August 30, 2024.
[13] Vallejo, M. C., Burbano, R., Falconí, F., & Larrea, C. (2015). Leaving oil underground in Ecuador: The Yasuní-ITT initiative from a multi-criteria perspective. Ecological Economics, accessed at: https://doi.org/10.1016/j.ecolecon.2014.11.013 on August 30, 2024.

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