Understanding Resource Revenue Flows and How to Stop Leakages: A Case Study of the Yukon
Project Leader: Lee Huskey, Professor at the University of Alaska Anchorage (firstname.lastname@example.org)
Chris Southcott, Lakehead University
Helen Booth, Department of Economic Development, Yukon Government
Chris Walsh (University of Ottawa)
May 2014 to February 2018
As part of the ReSDA workshop held in Ottawa on October 26-28, 2016, Dr. Lee Huskey provided an update of the research. You can view the powerpoint presentation or read the abstract provided that summarizes the current status of the project.
Publications and Presentations:
Lee Husky, June 2017. “Jack London and the Development Linkage in a Frontier Economy.” presented in a ReSDA sponsored session at the Ninth International Congress of Arctic Social Science, Umea, Sweden.
Lee Huskey. June 2017, “The Development Linkage in Natural Resource Economies. paper presented at the Ninth International Congress of Arctic Social Sciences. Umea, Sweden
Abstract: This paper explores the long term economic consequences of a resource boom. The boom-bust story of natural resource based economies describes them as fragile, dependent on the fortunes of their natural resource industries. An economy simply contracts when its staples sector declines. A number of authors have hypothesized that resource development under certain conditions would leave behind a more resilient economy. This argument suggests the support sector will not completely collapse in a staples bust and some portion of it will remain. This remainder changes the frontier economic environment, providing services and reducing costs for future economic activity. Understanding the conditions which this happens will add a development linkage to Staple Theory. The development linkage provides a way to understand how resource development contributes to long term community economic well-being. The historic development experience of a number of communities in Alaska and Canada that experienced resource booms provides a test for this hypothesis.
Huskey, L. “The Steady Village: History, Policy and Alaska Village Population” presented at a ReSDA sponsored session at Arctic Science Summit Week 2017. Prague, Czech Republic, April 2017.
Huskey, L. “An Arctic Development Strategy? The North Slope Borough Confronts the resource Curse” presented at the Western Regional Science Association Annual Meetings, Hawaii, February 2016.
Southcott, C. “Linkages and Leakages in Canada’s North: The Staples Theory and the Yukon’s Faro Mine”. Presentation at the Annual Conference of the Canadian Sociological Association, University of Ottawa, Ottawa ON, June 5, 2015. Read.
Huskey, L. “How I learned to stop worrying and love the resource boom” , Presentation at the Annual Meetings of the Western Regional Science Association, Tucson, Arizona, Feb. 18, 2015. Read.
Southcott, C. “Trying to Trace Linkages: The Staples Trap and the Yukon’s Faro Mine”, Presentation at the Annual Meetings of the Western Regional Science Association, Tucson, Arizona, Feb. 18, 2015. Read.
Southcott, C. “Avoiding the Trap Without Being Cursed: Resource Revenues and Indigenous Communities in the Arctic” Presentation at the Resources, Economy, and Society Research Group Symposium 2015, Lakehead University, Thunder Bay, February 6, 2015. Read.
Journal Article, May 4, 2016. Lee Huskey and Chris Southcott “That’s where my money goes”: resource production and financial flows in the Yukon economy“ The Polar Journal. Vol. 6, No. 1, 2016. pp. 1-19. Taylor and Francis. http://dx.doi.org/10.1080/2154896x.2016.1171002 available here.
Abstract: Staple theory is offered as an alternative to the resource curse for discussing resource development and sustainability in Northern regions and communities. Staple theory examines the money flows from resource development along the backward, forward, fiscal and final demand linkages to the local economy. Staple theory provides for more specific types of policy recommendations for affected communities. The staples approach is applied to the Canadian Yukon. A general overview of the Yukon’s historic resource development is presented. This is followed by an application of the staples approach to the recent Yukon resource boom.
Limited economic opportunities mean northern residents are searching for ways to insure that development of the regions resources results in prosperity. In particular they are looking for ways to ensure that a larger share of revenues remain in the region to build “linkages” that can be used to bring about a more sustainable economic future. The first area that we need to clarify is where exactly the money from Arctic resource development goes. If we want to find out about how to increase fiscal linkages we have to have a better idea of what money is produced by these operations and where this money ends up. The proposed project would first examine the fiscal indicators that currently exist in order to develop a model of measuring linkages and revenue leaving the region (leakages) that could be used by Arctic communities and regional government. This would be done so that they would have better idea of where the money from resource development goes and what they can do to make sure more of the revenues stay in the region. The project will start with a case study of resource development in the Yukon.
The initial proposal for ReSDA clearly noted the need to undertake the research outlined in this proposal. As the proposal states, “The main objective of this project is to find ways of ensuring that the resource exploitation benefits northern communities rather than destroys them. There is some indication that the worst aspects of the resource dependence can be countered through the introduction of new policies and models of development that increase local control of development and ensure a higher share of resource rents are passed on to northern communities…”
The idea of comparing the different resource revenue regimes was one of the gap analysis projects that ReSDA initially undertook in order to clarify what should be the main research questions. This project is a direct result of the first two recommendations of that gap analysis.
Building on the earlier gap analysis the work for this project has already started. Initial findings were presented in a paper presented at the Western Regional Science Association meetings in February, 2014. This project will build on the initial work by allowing us to first examine more closely the indicators that have already been identified. Further research will allow us to discover other potential indicators. Following this, the researchers will be identifying existing leakages in order to evaluate whether these leakages can be reduced and new linkages created.
- May 2014 to August 2014 – researchers will continue to examine existing indicators. Both Huskey and Southcott will travel to the Yukon to conduct interviews with key experts in August.
- September 2014 to April 2015 – the researchers will continue to analyze data previously. A graduate student will assist in a literature review of new techniques to increase the stickiness of resource revenue. The student will develop a thesis around a comparison of the relative value of new models of resource revenue distribution.
- May 2015 to August 2015 – researchers will finalize an initial report to the Yukon Government and other community partners based on initial findings. In July or August 2015 a community research workshop will be held in the Yukon to present the initial findings and get feedback and direction for the final stage of research.
- September 2015 to April 2016 – researchers will analyze data from the community research workshop and undertake necessary final research so that a final research report can be delivered to ReSDA and community partners by May 1, 2016. This period would also be used for finalizing academic publications and for undertaking appropriate knowledge sharing.
Department of Economic Development, Yukon Government
For more information contact:
College of Business and Public Policy
University of Alaska Anchorage
Department of Sociology