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Using ELLED to reduce a country’s dependence on extractive industry activity

ELLED can be used as a key strategy to create social and economic benefit during an extractive industry project, generating opportunities to build up local capacity such as through mentorship, training, technology transfer, job opportunities, and business development. However, it is not only the short-term benefits during a project’s life but the opportunities to apply the transferable knowledge, skills, tools, and experiences developed through working with the extractive project to build up other industries over the long-term, further diversifying the economy. As discussed heavily in the section on Horizontal Linkages, it is advisable is to design ELLED policies that explicitly focus on diversification as a key aspect of ELLED from the outset, rather than an afterthought. These strategies for diversification must complement efforts to manage revenues from taxes well which aim to invest in the needs of the country, strengthen the economy, and save for the future.

Working with extractive industry companies to develop new infrastructure is another significant way to help an economy diversify. In the Shared Use of Extractives Infrastructure and Resource Corridors section of the ELLED Framework, policy-makers can learn how to increase infrastructure in-country to benefit other parts of the economy. For example, working with a mining company to create new transport infrastructure has the potential to help strengthen non-extractive industry sectors of the economy who can use new transportation routes to lower their production costs.

With the correct circumstances, Special Economic Zones (SEZs) can also help to lower the dependence of a country’s economy on extractive industry. Zones targeted for firms to supply or further process the outputs of extractive industry sites could be utilized to help build up firms from other sectors.