Mineral Wealth in the Decentralization and Royalties Era: Case study of La Guajira, Colombia (1990 – 2010)

Should we be concerned or encouraged by the prevalence of the mining sector in developing countries? What policy measures has been taken to address the downturns from mining and turn them into opportunities? The answers to these questions are a complex matter and this paper addresses them directly. This paper confirmed that the mining produces wealth indeed, and that its redistribution is hindered by weak institutional systems. This is of high concern since the channels to convert the mineral wealth into sustainable possibilities of development are based upon the right institutions and the right balance of power. In absence of which, mining in fact threaten the destruction of local livelihoods, despite the production of substantial wealth. This paper argues that, these channels mentioned above lie down deep in the configuration of the decentralization arrangements and especially on the fiscal tools to translate resources into welfare, accompany with the political devolution of power to govern locally. In Colombia the body of norms of the decentralization of the past thirty years addressed simultaneous administrative, political and fiscal measures to bring the delivery of services closer to the people by more autonomous and capable local governments. In the presence of the biggest mining enclave of the continent, La Guajira’s fiscal situation is highly dependent on mining. While the political measures brought power back to the people to elect and retire governments, and the administrative measures strength the allocative role of the subnational government, the better services are still awaited. This paper finds that a sophisticated network of rent seekers is washing away the larger wealth produced out of the mining enclave of La Guajira. Violence is exerted affecting the democratic transition towards more accountable local structures of government. Sometimes these two forces align themselves. Consequently, this paper confirmed a large gap between social strata, a political contest over the resources, and a ‘resource curse’ over its economy. Decentralization regulations support legally and administratively this situation. Although, there are attempts of control from civil society and institutional systems, the equilibrium of powers between the national and the subnational governments hoist the greatest concerns about the coming future.