Social impact of the extractive industries in local content and employment in Albania

This is a study conducted by Albania EITI on the social impact of extractive industries in the local content and employment. 

“Extractive industry” is a term that is often used to describe non-renewable resources, such as oil, gas and minerals. Revenues from extractive industries often concentrate wealth and power in the hands of the few, thereby exacerbating inequality, poverty and levels of corruption. Moreover, this ‘easy’ revenue protects governments from being responsive to the electorate, as other forms of tax collection become less necessary, weakening state-society relations. 

Indeed, decision-making processes become removed from the needs and interests of local groups, leading to neglect and the breakdown of a just and fair social contract between the government and the governed. Furthermore, the appreciation of currency is followed by huge and sudden increases in revenues from mine and oil production. This causes exports to become uncompetitive and industries such as manufacturing and agriculture to decline. Consequently, in many cases countries have been unable to translate soaring Gross Domestic Product (GDP) into corresponding improvements in citizens’ welfare. Instead, natural resources actually inhibit the establishment of conditions that nurture peace, namely: an economy that distributes benefits equitably and transparently; a representative government that is not corrupt and which encourages social cohesion; vibrant civil society organisations; and, an independent judiciary. 

When mismanaged, natural resources - far from being a blessing - quickly become a curse. As demands for resources such as oil increase as a result of rapid economic growth, and as populations continue to rise, so will competition for ever scarcer resources, placing enormous stress on the environment with diverse repercussions on society. 

There is an ongoing debate on the relevance of social impact and corporate social responsibility (CSR) and its ability to provide visible development in the extractive industry. In this Study, we consider two major EI’s agreement, Alb Petrol and draw on a sample from communities in which these companies operate in order to determine their social impact and CSR on various dimensions of community development. 

We find that, in Albania, the debate is not about whether these extractive companies are developmental or not, but rather what strategies and policies scan help increase their social impact in the communities resources, of whom they are using CSR efficiency. Findings suggest that social impact and/or CSR accounts for several visible infrastructure in extractive industry’s communities. However, there is a major flaw in empowering community members and their improving.