Revenues Sharing in Mineral Exploration: Local Authorities’ Incentives towards Economic Diversification in Romania
Round 1
Reviewer 1 Report
This manuscript has as its focus the analysis of economics of mineral or other resource extraction as it relates to communities and poverty. The Introduction gets it right: many places in the world where valuable resources are extracted remain those mired in poverty. This is an extremely important topic.
Near the bottom of part two the authors spell out the two research questions they wish to address in the manuscript.
Part 3 is a combination literature review and theoretical analysis. The authors maintain that economic diversification is the way for poor areas that export minerals/etc to rise from poverty. I would just like to contribute here that another way that areas that rely on exporting raw materials to gain economic growth is through value added. It is a form of diversification, but one that is linked to the resource extracted. This is extremely uncommon for extractive industries, probably because of the nature of the resources, and is more common for agricultural production, etc where food processing plants can be located in areas where food is grown to add value, increase jobs and economic development etc. A few words about this in section two or three might be appropriate, but I am not going to require it. Generally speaking, section three is laid out well, with effective use of section and paragraph breaks, as well as bulleted statements.
Section 4 is results, where the authors dig very heavily into the particular case that is featured in this manuscript. The authors did in fact state that this was a case study. Opinions differ greatly on the value of case studies in a journal such as this, because often the circumstances in the study location are so specific that readers may have difficulties in understanding how the material may apply elsewhere. In fact, the authors open section 5 (Conclusion) specifically referring to Romania rather than generalizing the results to areas that export minerals/extracted resources.
The authors begin the sentence on line 591 as though they might be writing about these types of regions in general, but immediately fall back into referring to Romania in particular. I do not know if readers would be willing to continue to follow an article that continues to refer to one area in a case study in hopes of gaining general knowledge about this topic.
There are a few writing problems in the manuscript as well. For example, the final paragraph before section 5 is one huge sentence: a “run-on” sentence with about 100 words. Sentences like these should be broken up into at least two and possibly three sentences.
The revision I am requesting is that while it is okay to have a case study on Romania, the authors should include up front and in the results and especially in the conclusions the implications the analysis has for regions that export minerals but remain relatively poor, because this is a phenomenon that exists in communities all over the world – coal mining regions in the USA, etc. Try to minimize the mention of Romania in general in the manuscript, but especially in the conclusions and emphasize how these findings may apply generally.
Decision: Major revision
Author Response
Response to Reviewer 1 Comments
Point 1: This manuscript has as its focus the analysis of economics of mineral or other resource extraction as it relates to communities and poverty. The Introduction gets it right: many places in the world where valuable resources are extracted remain those mired in poverty. This is an extremely important topic.
Response 1: It is not necessary to provide an answer to point 1. above.
Point 2: Near the bottom of part two the authors spell out the two research questions they wish to address in the manuscript. Part 3 is a combination literature review and theoretical analysis. The authors maintain that economic diversification is the way for poor areas that export minerals/etc to rise from poverty. I would just like to contribute here that another way that areas that rely on exporting raw materials to gain economic growth is through value added. It is a form of diversification, but one that is linked to the resource extracted. This is extremely uncommon for extractive industries, probably because of the nature of the resources, and is more common for agricultural production, etc where food processing plants can be located in areas where food is grown to add value, increase jobs and economic development etc. A few words about this in section two or three might be appropriate, but I am not going to require it. Generally speaking, section three is laid out well, with effective use of section and paragraph breaks, as well as bulleted statements.
Response 2: It is not necessary to provide an answer to point 2. above.
Point 3: Section 4 is results, where the authors dig very heavily into the particular case that is featured in this manuscript. The authors did in fact state that this was a case study. Opinions differ greatly on the value of case studies in a journal such as this, because often the circumstances in the study location are so specific that readers may have difficulties in understanding how the material may apply elsewhere. In fact, the authors open section 5 (Conclusion) specifically referring to Romania rather than generalizing the results to areas that export minerals/extracted resources. The authors begin the sentence on line 591 as though they might be writing about these types of regions in general, but immediately fall back into referring to Romania in particular. I do not know if readers would be willing to continue to follow an article that continues to refer to one area in a case study in hopes of gaining general knowledge about this topic.
Response 3: Regarding the comments for Section 4 and the Conclusions, we have made major improvements. We have completely rewritten and restructured these parts to respond to your requests. Section 4 was structured into two main subsections as follows: 4.1 Institutional challenges and industry support programmes in the CEO case and 4.2 Restructuring solutions for local economic diversification in extractive regions.
Section 4.1 covers of the economic problems of CEO (Complexul Energetic Oltenia) discussing the challenges that this company faces and the solutions that the government have provided to support the company in the systemic restructuring and decarbonization of its electricity production.
Section 4.2 covers restructuring solutions for local economic diversification in extractive regions. The implications of the analysis were extended to other examples in the world for regions that export minerals but remain relatively poor. We also examined some examples of good practices to contribute to the literature with the most comprehensive study possible.
Point 4: There are a few writing problems in the manuscript as well. For example, the final paragraph before section 5 is one huge sentence: a “run-on” sentence with about 100 words. Sentences like these should be broken up into at least two and possibly three sentences.
Response 4: The writing problems in the manuscript were corrected. The text was carefully checked, and the long sentences were rephrased and shortened to be clearer and more concise. The manuscript was also checked by a native English-speaking colleague.
Point 5: The revision I am requesting is that while it is okay to have a case study on Romania, the authors should include up front and, in the results, and especially in the conclusions the implications the analysis has for regions that export minerals but remain relatively poor, because this is a phenomenon that exists in communities all over the world – coal mining regions in the USA, etc. Try to minimize the mention of Romania in general in the manuscript, but especially in the conclusions and emphasize how these findings may apply generally.
Response 5: The conclusions have been redrafted and the specific references to Romania have been removed. The analysis was extended to other examples in the world of regions that export minerals but remain relatively poor, in order to arrive at general conclusions with a recommended value for extractive regions.
Reviewer 2 Report
Manuscript title: “Revenues sharing in mineral exploration: Local authorities’ in- 2 incentives towards economic diversification in Romania” is devoted to the economic and social aspects of the distribution of revenues from mineral exploration in Romania. It raises aspects of the distribution of income from mineral exploration and diversification of the Romanian economy that are relevant for Romania. The manuscript is well written, but I have a few comments.
1. 1. We need to improve the English language a little. There are extra articles in the text. For example, in a screen of the text below. 1. Articles "a" and "to" must be removed.
2.
3. Authors form sentences that are too long, such as lines 44-47.
4. “Arellano-Yanguas' [32] critique relies on the Peru case study, where resource-rich local governments do not perform well in terms of socio-economic standards”. (line 141)
I would recommend that the authors give an example of another country that is more developed than Peru.
The same applies to the unsuccessful, as far as I understand, experience with the company Complex Energetic Oltenia.
5. Is it possible to give some successful examples in contrast to this company?
Author Response
Response to Reviewer 2 Comments
Point 1: Manuscript title: “Revenues sharing in mineral exploration: Local authorities’ in- 2 incentives towards economic diversification in Romania” is devoted to the economic and social aspects of the distribution of revenues from mineral exploration in Romania. It raises aspects of the distribution of income from mineral exploration and diversification of the Romanian economy that are relevant for Romania. The manuscript is well written, but I have a few comments.
Response 1: It is not necessary to provide an answer to point 1. above.
Point 2: We need to improve the English language a little. There are extra articles in the text. For example, in a screen of the text below. 1. Articles "a" and "to" must be removed. Authors form sentences that are too long, such as lines 44-47.
Response 2: The writing problems in the manuscript were corrected. The manuscript was also checked by a native English-speaking colleague. The text was carefully checked, and the long sentences were rephrased and shortened to be clearer and more concise.
Point 3: “Arellano-Yanguas' [32] critique relies on the Peru case study, where resource-rich local governments do not perform well in terms of socio-economic standards”. (line 141). I would recommend that the authors give an example of another country that is more developed than Peru. The same applies to the unsuccessful, as far as I understand, experience with the company Complex Energetic Oltenia. Is it possible to give some successful examples in contrast to this company?
Response 3: Regarding the comments for “Arellano-Yanguas' [32] critique, we also added an example from Norway and further to extend the analyse we restructured Section 4 as follows:
Section 4.1 covers the economic problems of CEO (Complexul Energetic Oltenia) and discusses the challenges that this company faces and the solutions that the government have provided to support this company in the systemic restructuring and decarbonization of its electricity production.
Section 4.2 covers restructuring solutions for local economic diversification in extractive regions. The implications of the analysis were extended to other examples in the world for regions that export minerals but remain relatively poor. We also examined some examples of good practices to contribute to the literature with the most comprehensive study possible.
The conclusions have been redrafted and the specific references to Romania have been removed. The conclusions are of a general nature with a recommended value for the mining regions.
Reviewer 3 Report
I like your article because it is very interesting area of research. However I am not sure if you really made a research worthy of this journal. I miss there some concrete number, or calculations, by which you can show, what mean economically for Romania/region/mining company tax regimes which you mentioned. It should be also more illustrative fo readers. Some parts, for example No. 3 Literature review maybe would be better to take into introduction, or right after introduction. In introduction also I would like to see more information about the raw materials in Romania (if all of them are taxed by the same way/ same amount of taxes). Also something from the mentioned Raw Materials Policy, when should be clear to what is Romania focused in this field.
Author Response
Response to Reviewer 3 Comments
Point 1: I like your article because it is very interesting area of research. However I am not sure if you really made a research worthy of this journal. I miss there some concrete number, or calculations, by which you can show, what mean economically for Romania/region/mining company tax regimes which you mentioned. It should be also more illustrative fo readers.
Response 1: They did not use raw data and quantitative methods of analysis, as the authors approached the research from a legal and administrative perspective. The aim of the research, as reflected in the questions formulated in the Materials and Methods section, was to identify how powers are exercised by local authorities to achieve local economic diversification in extractive regions in order to avoid negative economic, social and environmental impacts.
Programmatic documents and secondary data were used to examine how mining revenues are managed and spent according to the Romanian tax structure and regime, in order to contribute to local economy diversification.
Point 2: Some parts, for example No. 3 Literature review maybe would be better to take into introduction, or right after introduction. In introduction also I would like to see more information about the raw materials in Romania (if all of them are taxed by the same way/ same amount of taxes). Also something from the mentioned Raw Materials Policy, when should be clear to what is Romania focused in this field.
Response 2: The research was structured on two levels: a theoretical framework including a literature review on economic diversification and an examination of the structure of taxes and financial autonomy of local authorities. The second part, called a case study, deals with the current situation of extractive regions in Romania. The identification of the restructuring solutions proposed by the Romanian government, analysed in relation to other successful or unsuccessful models, has allowed us to identify the problems faced by local authorities and to formulate general recommendations for improving practices in regions affected by extractive industries.
Round 2
Reviewer 1 Report
The authors did a very thorough job in making the revisions I requested. I think that, in its current form, the manuscript will have a much broader appeal because it not only focuses on Romania, but on all areas where much of the economy is dependent on extractive industries. And there are areas like that all over the world, including countries that are otherwise highly developed.
The authors also took the initiative to change some of the writing/paragraph and sentence structure that I requested. I know this was a major effort, but it was worth it, because the current version will make a strong contribution to the Journal.
Decision: Accept
Reviewer 3 Report
Thank you very much for your answer as well as for revisions.
