Mineral extraction, economy and the urban environment: The role of foreign direct investment in economies in transition and developing countries

Many countries of the Central and Eastern Europe (CEE) region, including newly independent states (NIS), are mainly concerned with the issues of economic growth and development. If the countries are rich in mineral resource deposits they can benefit from their existence since they provide constant foreign direct investment (FDI) inflows. In these countries the multinational corporations (MNCs) are believed to be a vehicle of positive economic, social and environmental changes. Although MNCs play an important role in the development of the world economy, they are still considered as one of the largest contributors to deterioration of the countries’ environment by exploiting their mineral resources. Furthermore, excessive FDI growth affects the main cities in the CEE region and accelerates the speed of the urban infrastructure development. Such cities as Budapest, Prague, and Warsaw are in need of bigger quantities of natural resources to sustain their populations, which are constantly growing due to internal migration. It is inevitable that, because of such huge “appetite”, the cities in the CEE region will face major environmental challenges, such as air pollution, wastes, and deterioration of health and housing conditions. The purpose of this paper is to analyze the correlation between urban development and FDI in the CEE and NIS. In addition, the role of FDI in the mining industry as one of the most attractive industries
for international institutions is studied. The paper also scrutinizes two recent goldmining related, environmental accidents, one in Kyrgyzstan and the other in Romania, to exemplify the negative implications of FDI presence in these countries.