Have Westerosis benefited from their natural resources?

Gold, silver, iron, and copper in Westeros has been exploited for centuries yet extraction only benefited a few great houses and their lords and ladies. Inequality and poverty remains a constant development issue in the realm. Here comes Daenerys <insert ALL titles here> with her three dragons aiming to conquer all Seven Kingdoms. If she wins the Game of Thrones, how can she turn Westeros’ resource wealth to sustainable development?

[Spoilers ahead]

Learn from the Lannister-induced resource curse in Westerlands

Gold mining in Casterly Rock minted (pun intended) the richest family in Westeros - the Lannisters. For generations, the Lannisters exploited gold in Casterly Rock. Some estimates put their gold at 18 billion dragon gold.

By Season 7, the Lannisters had to rob the Tyrells <sobs very heavily> of their harvests and gold to pay the Crown's debts owed to the Iron Bank because their own reserves ran dry. What happened with all that gold?

Lannisters put their money where their mouth is and sadly that is not human capital, infrastructure, and economic diversification. Instead, they used their gold to fight wars and build their military strength (also throw lavish parties and buy Dornish wine). Gold has ran dry and yet other industries have not spawned. This is important as their lands are not the most fertile in the realm making agriculture difficult. They did not bother diversifying westerlands’ local economy. Why would they when their source of income seemed endless and quick?

There is no such thing as forever in mining and Cersei learned this the hard way. Daenerys needs to be well aware of this if she is to rule the Seven Kingdoms. Every mining project has a start and end a.k.a. life-of-mine. Lannisters should have prepared for the day when their mines would run dry. They did not. 

Be transparent, consultative, and strategic in governing natural resources

If you need to send your best friend to the Citadel and try to be a maester just to find out where dragonglass can be mined, it only shows the grave information asymmetry in the Seven Kingdoms. Had that information been available to the public, the show would have ended three seasons ago. Making this information public allows for efficient exploitation since exploration activities would be limited to areas with most potential. This information would give Daenerys or her negotiators (possibly Tyrion) bargaining power during contracts negotiations without using Drogon. 

When Jon Snow asked to mine dragonglass underneath Dragonstone, Daenerys consented to the extraction. There was little negotiation except that she asked him to bend the knee (pride > sustainable development). Will the mineral extracted be paid for? Certainly not. There was no mention of royalties or payment for the dragonglass. The terms were entirely verbal and nothing in written form i.e., contract. No public consultation or environmental impact assessment was conducted (possibly because whites are marching quick!). Holding Dany or Jon accountable in the event of social conflicts or environmental degradation in the future will be difficult. ​​​​​

If Daenerys is to rule the Seven Kingdoms, the Crown needs to be transparent, consultative, and strategic in negotiating terms for the extraction of its finite resources or she will be no different to the Lannisters. Extraction has to be done by the most technically and financially capable contractors and not by your incapable relatives/love interests who knows nothing.

Develop downstream industries and sound management of mining revenue

Westerosi economy is primarily agricultural. Revenues from mining, however, can be a source of capital to develop other sectors of the local economy. But not too quick because this will cause the economy to overheat and send prices off the chart! Investing in Essos can be an option. 

Westeros have skilled smithies and forgers. Daenerys and the Small Council only need to create linkages between miners and processing sectors of the economy. This is to maximize value from Westeros’ minerals and create more jobs. The Crown can trade these goods and continuously develop other sectors such as the service economy (not necessarily Baelish’ brothels though).

Once mining revenues start to come in, Daenerys needs to invest part of it in building infrastructure to facilitate trade. She needs enormous spending on human capital - education and health, if her welfare-for-the-people rhetoric is to be genuinely realized. She might want to establish a Stabilization Fund or Future Fund (similar to Ghana’s!). These funds would help the Crown’s finances stabilize during the rainy days (or long winters in the case of Westeros) and in the event when the minerals run out.

Daenerys needs to be wise in managing revenues from mining. This means being prudent and not as lavish as the Lannisters. 

Conclusion

Just when you thought Game of Thrones is all about mythical creatures and blood, you are wrong. It also sheds important lessons for many resource-rich countries today.

Dear Khaleesi, 

Mineral resources are nonrenewable. Extracting them offers a one-time opportunity to contribute to the sustainable development of its owners - Westerosis. Social and environmental costs need to be accounted for. Benefits need to be maximized or they will just go to waste (or to Dornish wine).

Sincerely,

​Marco

Your subject/resource governance consultant