Corruption? In the mining industry? We know it's a wild idea.
๐ Background: Glencore is the world's biggest mining company by revenue. It's headquartered in Switzerland and brings in around US$220 billion each year (around double the GSP of South Australia!).
๐ What happened: Glencore has admitted to bribery in South America and Africa and price manipulation in US fuel-oil markets... And now it will pay $2.1 billion to settle the case.
๐ What else: Glencore ain't the only ones. The company and its rivals have traditionally operated outside the view of regulators. This can often lead to what's called the 'resource curse'.
๐ก The resource curse is where countries experience poor economic growth despite their valuable natural riches.
๐กThe theory is that countries begin to focus all of their efforts and attention on a single industry and neglect investments in other major sectors. This becomes a problem when these natural resources are non-renewable.
๐ก It becomes an even bigger problem when the country has government corruption. That's because governments have more opportunity to abuse regulatory power when it's concentrated in a few industries. Ultimately, this can lead to lower economic growth and less democracy.
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