"The new context for industrializing around natural resources: an opportunity for Latin America (and other resource rich countries)?"
The Other Canon and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics; Working Paper no. 62.
Link: 2015070612040808.pdf (2.99mb)
This chapter argues that development is a moving target, and that windows
of opportunity to both ‘catch up’ and ‘leap ahead’ present themselves
at certain times and in specific regions due to technological revolutions
and paradigm shifts. Having examined the historical precedents, it
observes that the exploitation and processing of natural resources (NR),
once seen as a ‘curse’ for developing nations, present such an opportunity
for Latin America and other resource-rich countries at this stage in
the diffusion of the ICT revolution. The factors changing the context and
conditions around NR are analyzed, from the new nature of markets and
the growing influence of environmental factors to the significant increase
in technological dynamism and potential for innovation in developing
countries brought about by ICT and market segmentation. Examining the
specificity of Latin America in its ability to respond to these different
conditions, and identifying the capabilities gained in the previous opportunity
with import substitution, the article argues that success today
would depend upon building natural resource-based networks of innovation
aimed at the dynamic Asian markets. Given the low labor intensity
of most NR processing industries, a dual-integrated strategy of ‘resourceintensive
industrialization’ is proposed which promotes both top-down
economic growth for global positioning and bottom-up wealth creation in
each corner of the territory generating employment and well-being for all.
It is finally argued that such a converging process of growth and innovation
is both possible and necessary to ensure that Latin America benefits
from the current window of opportunity while building a platform of innovative
potential, networks and social capabilities in order to be able to
leap forward with the next technological revolution. The many obstacles
and limitations are not ignored; they can only be faced successfully if the
nature of the opportunity is fully recognized.
Table of Contents:
As technology changes, so do opportunities
The lessons and legacy of the recent past - Growth with the ISI model
Historically changing views on natural resources: from blessing to ‘curse’ and back?
How has the context changed for natural resource producers?: Revisiting the potential for technological catching-up
A change in natural resource price levels
The new hyper-segmented nature of all markets
Ample pathways to information and global markets through ICT
A shift in behavior: from the old MNC to the global corporation (GC)
Can Latin America hitch its car to Asian growth?
The importance of networks as systems of innovation
The forces driving innovation in the natural resource networks
Growth in market volume
Changing market requirements
Changes in the market context
Advances in ICT and other technologies
A dual integrated strategy
Conditions of viability: the challenges and the obstacles
The need for adequate capabilities and vision to make the double leap
Facing probable competition
Traditional obstacles and new uncertainties
A political and policy challenge
Those who doubt the potential dynamism of natural resources (NR)
assume that there are truths about certain sectors that do not change
over time. This is reflected in much of the literature on development, and
has filtered into the beliefs of policy makers. Yet evolutionary economists
hold that technological change is at the very heart of economic growth,
with constant shifts in the relative dynamism of companies, industries
and sectors. And indeed, even a cursory glance at the natural resources
sector reveals that the context has significantly changed since the postwar
period, when many of the current ideas about development evolved.
The character of energy, materials and food markets has shifted dramatically;
the potential for innovation in developing countries is much
greater than before; all markets have segmented into niches; global corporations
have changed their behavior; and, last but not least, environmental
factors have come into play as a challenge and as a growth
opportunity for both developed and developing nations.
This paper will examine the implications of such technological changes for
resource-endowed countries, building on the notable shift in the level of
awareness, both in theory and in practice, of the role of innovation in
growth and development. In line with the neo-Schumpeterian and evolutionary
tradition, the article starts from the idea that some industries3
, in some
periods, offer more opportunities for innovation and dynamism than others.
It will argue that the reasons for not seeing the natural resource industries
among those with higher opportunities for most of the twentieth century
are largely historical and that the context has changed significantly.