Should a country mine all its diamonds and sell them as quickly as possible?

There are several reasons why a country should mine all its diamonds and sell them as quickly as possible:

⦿ Income and employment and living standards would be increased in the short term

⦿ Government tax revenue would be increased, enabling the government to spend more on e.g. infrastructure

⦿ Export revenue would be increased, improving the current account position

⦿ Demand may be high now causing the price to be high. This leads to a greater incentive to supply now

⦿ Demand may fall in the future lowering prices so income earned in the future may be lower in the future

⦿ Higher output now may result in improved economies of scale lowering costs

⦿ Higher output may enable greater advantage to be taken of economies of scale lowering the average cost

There are several reasons why a country should not mine all its diamonds and sell them as quickly as possible:

⦿ Stocks of diamonds will be depleted preventing diamond production in the future there is a finite supply of diamonds

⦿ Global demand may be low now demand may be higher in the future

⦿ An increase in the supply of diamonds may lower prices which may reduce revenue

⦿ The country may risk being too dependent on diamonds

⦿ Advances in technology may reduce costs of mining in the future

⦿ Over-mining may increase the risk of pollution causing environmental damage

⦿ In the long-run employment and GDP may be higher