McKinsey Global Research (MGR) has released a monster new report entitled Reverse the curse: Maximizing the potential of resource-driven economies, which examines how countries with large resource endowments can handle them more effectively in order to bolster economic development.
According to MGR, there were 81 “resource economies” in 2011 accounting for 26% of global GDP. This was up from 58 “resource economies” in 1995, accounting for 18% of global GDP. And while most of these are developing nations – 69% of people living in extreme poverty are reportedly in “resource economies” – advanced developed nations like Australia, Canada, and Norway are also in the mix, with these high income nations receiving almost 90% of global resources investment.
Turning to Australia, MGR ranks the mining industry in the top six across each of its six areas of the resources value chain, suggesting that Australian mining is close to world’s best practice (see next table).
That said, MGR does identify significant opportunities for improvement, particularly relating to operating costs in the LNG industry, which could be halved via a combination of government and industry action: