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Gold: Third World Economic Lifeline

Updated on December 27, 2009

Now that gold has skyrocketed in price well over its historical highs to a peak point where it was worth considerably more than $1,200 per ounce, it is worthwhile to take a very close look at this precious metal which has been coveted for so much of human history.

Today the mining of gold is absolutely essential to the economies of a great number of developing countries around the world. These countries have various socio-economic aspects in common and the most interesting one is that generally they have a fragile economic structure. It seems to be a paradox that these same countries that are responsible for approximately 70% of all the production of all the gold in the world are usually the ones that are worse off economically in the financial ranking of nations.

Over and above the generation of revenue in the selling of gold at world price for these countries which actually mine the gold from their own territories and then export it, the production of gold also provides tax income and royalties to their governments which enable them to provide government services to their citizens. Or at least that's the way it's supposed to work.

In reality, very little of these riches from gold ever trickles down to the level of providing services to populations, as most is lost in inefficiencies and blatant corruption. There have been estimates that as much as 20% of the entire gold value on Earth has been siphoned off to the pocketbooks of corrupt politicians and functionaries.

Not all of the story of gold is a story of graft. There are some aspects of gold mining and selling which are not utterly corrupt, but the percentage varies widely from one nation to the other. When it works the way it's supposed to work and controls are implemented and enforced to keep the corrupt hands out of the golden cookie jar, then there are significant advantages in the transfer of technologies from the more developed countries to help spur and maintain associated industries in these development countries.

The training of workers is also an important factor as the developed countries help in turning unskilled labor into a highly skilled workforce: It is through these interactions that the overall workforce of any one particular Third World nation obtains modern skillsets and therefore becomes more marketable in a globalized economy. It is obvious that if we compare an individual whose only skills are hardscrabble plough agriculture with another individual in the same country who has been trained in various mining processes (some of which even involve computerization), the latter worker is going to have the potential of earning a much greater amount of money: This brings up the standard of living not only for their families but also for their entire villages.

The mining of gold can also assist a nation in improving their social, financial, legal and physical infrastructures. Some developing countries which have concentrated very heavily on mining and exporting their gold have witnessed substantial ameliorations to their entire socio-economic structure.

Continued In Gold: Production Is Being Ramped Up


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