Extractive industry for sustainable development? Some reflections on the role of investment contracts in ensuring benefit sharing and community participation in natural resource governance

Contrasting perspectives exist with regard to the benefits of foreign direct investments (FDIs) in the extractive industry sector. On the one hand, FDIs in the extractive industry are usually associated with positive effects on the State’s macroeconomic performance, government revenues, local employment and ultimately on the economic development of the host State. On the other hand, extractive activities may significantly impact on the environmental and social equilibrium of the areas where they take place. States have been increasingly faced with the challenge of stimulating local community's participation in FDIs, while limiting negative externalities. The present chapter aims to investigate the role of investment contracts in coping with this challenge. Through a detailed analysis of a selected number of investment contracts, the chapter analyses "benefit sharing" and "community participation" clauses and discusses their efficacy in fostering sustainable development and peacebuilding in conflict-affected settings.