# **Policy Recommendations**

153. Policy recommendations that could<sup>helpmitigatethenegativeimpactofcoalsector</sup> restructuring programs on communities<sup>canbegroupedintothoseof nationaloreconomy-wide</sup> relevance and those of relevance to the<sup>miningsectoror theminingmunicipalities.Theformer</sup> group will not be considered in detail<sup>here, bothbecausethiswouldbe beyondthescopeof the</sup> research, and more generally in adherence<sup>tothegeneralprincipalthatspecialregimesshould</sup> not be carved out of instruments of<sup>nationaleconomic policy.At the sametime, the importance</sup> to mining regions and municipalities of<sup>reforms thatcould(and should)be part of national-level</sup> policy cannot be overstated. Soome of<sup>the importantbroadareasof reforminthis regardwould</sup> include:

- the system of inter-governmental relations;

- the banking system and access to credit<sup>for a wide variety of purposes(to start</sup> businesses, improve real estate and infrastructure,<sup>etc.);</sup>

- housing and communal services;

- local economic development and diversification;

- education; and

- social protection.

154. The following policy recommendations<sup>are based ontheresultsof theresearchcarried</sup> out in Romania, Russia and Ukraine<sup>butwouldalso havebroadrelevancetoother industrial</sup> restructuring programs, particularly those<sup>wherethepatternsof municipal developmentandthe</sup> social aspects of restructuring are similar<sup>to those encounteredinthe coalsector.In onewayor</sup> another these recommendations seek<sup>tofurthera holisticor comprehensiveapproach,as opposed</sup> to the limited sectoral approach, to<sup>mitigatingtheimpactof sectorrestructuringontheentire</sup> community. 35 _155._ **Recognize early on the full range**<sup>**of costs tothe communityofsectorrestructuring.**</sup> and align benefits more closely with<sup>thecosts.Ex-ante analysesof coalsectorrestructuring</sup> recognize the great benefits that accrue<sup>to the economyat large from restructuringwhenthe high</sup> level of subsidization is eliminated<sup>and whenworkersreleasedfromthecoal sectorproduce</sup> greater value in other econornic activities. At the same time, such analyses usually<sup>do not</sup> recognize the full range and nature of<sup>thecoststhatareimposed by restructuringonthe</sup> community, including the negative<sup>employmentimpactofmineclosure on downstream</sup> industries and on services industries<sup>dependentonhouseholdpurchasingpower.</sup> The time frames required for the implementation<sup>of localdevelopment initiativesand the transitionof shed</sup> labor to more productive uses also<sup>tendtobeunderestimated, whichisanotherformof</sup> unrecognized costs to the extent that<sup>theserepresentdelaysin theaccrualexpectedbenefitsand</sup> increased social tension. The recommendation<sup>tomorecloselyalignthecostsandbenefitsof</sup> sector restructuring seeks to minimize<sup>theadditionalcoststhat resultfromfailingtorecognize</sup> upfront all the costs of sector restructuring,<sup>aswellastheadditionalcostsof protracting sector</sup> restructuring, and to more quickly move<sup>to the implementationof the mitigationstrategythrough</sup>

> **35** The observation in World Bank (2001<sup>a) that "regional policy has beendevelopedas a necessaryapproachto</sup> solving a wide range of systemic issues<sup>thatcannotbe resolvedby isolatedsectoralpolicies,"is of notein this</sup> context.

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