Why developing countries need new pulp and paper industries
The establishment of pulp and paper mills in developing countries very often faces problems such as the absence of the necessary infrastructure, undeveloped markets which cannot absorb the output required to make a new plant economically viable, and a lack of the required capital. Even comparatively small pulp and paper mills usually require investments of US$ 50 million to 100 million. The feasibility of starting up the very first pulp and paper mill in a developing country is also hampered by the necessity of using expatriates to operate the mill in the initial years.
The reasons for establishing pulp and paper industries in developing countries can be divided into two categories - positive and defensive. The positive reasons relate to creation of employment, development of skills, rural stability, and foreign-exchange earnings. The defensive objectives, on the other hand, aim at safeguarding the supply of paper for the development needs of the country and at the utilization of available domestic resources to reduce imports wherever possible. Thus, the available foreign exchange can be set aside for raw materials and products that cannot be produced in the country - for instance, fuel oil.
Although the employment provided by a pulp and paper mill in relation to the investment requirement is very small, there are secondary employment opportunities offered through a multiplier effect. New pulp and paper industries mean new jobs in activities such as logging and transport, as well as an increase in the general economic activity in the area where a new mill is established.
Establishment of a pulp and paper industry thus provides two prerequisites for rural stability: it reduces the migration of people from the rural areas seeking employment in urban communities; and it serves to develop skills that facilitate the introduction of other industries in a country.
Cover drawing: R. DICKERSON
