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"Can diamond mining benefit a country?"

Question

Discuss whether or not a country will benefit from diamond mining.

Category:

CIE October/November 2023.

Preview Answer

Diamond mining has both positive and negative economic impacts on a country's economy.

Positive Impacts:

Generates significant revenue due to global demand for diamonds.
Creates employment opportunities, reducing unemployment rates and stimulating economic growth.
Improves the current account balance through diamond exports.
Generates tax revenues for governments to invest in public goods and services.

Negative Impacts:

Market volatility affects revenues during economic downturns.
Incurs external costs such as pollution and social disruption.
Profit repatriation by multinational corporations drains capital from the host country.
Risk of resource depletion due to over-extraction.

Conclusion:
While diamond mining offers economic benefits, it also poses challenges like environmental degradation and economic instability. Countries should adopt balanced approaches, including stringent regulations and resource management, to maximize benefits while mitigating adverse impacts.

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