Latin American countries have long been major exporters of mineral resources and are therefore some of the main recipients of mining investments. It is no surprise, then, that the region showed strong economic performance during the last commodity boom super-cycle. However, there are few world-class, highly-innovative mining firms in the region – as are found in Australia and Canada.
Against this backdrop, UNU-MERIT and the Inter-American Development Bank (IDB) are researching how Latin American firms can integrate within the value chains of mining firms, and so increase technological capacities across the region. As part of this work, we co-hosted a project workshop in Maastricht on ‘Innovation, Mining and Global Value Chains (GVCs)’ on 12-13 April 2018. The aim is to refine policies in order to maximise innovation and trigger positive structural change. In other words, to transform the mining industry into a driver for development across Latin America.
In this preparatory workshop, we tried to find the best ways to measure the participation of Latin American countries and sectors in global value chains. This covered input-output analysis as well as detailed trade data and study cases at the firm, sectoral and macro levels. We also presented the latest research and theoretical foundations, in order to identify the opportunities and challenges faced by suppliers across different settings in Latin America – for example, in ‘understudied’ countries like Bolivia, Colombia and Mexico.
Further presentations covered experiences in other countries, including Chile. For example, in nurturing innovative suppliers while targeting environmental and social sustainability of operations (both common goals for the mining sector). Equally important we discussed innovation, technology developments, and patent trends that have been observed within this industry in recent years.
The workshop covered the industry from a global perspective, including the many caveats for discussing innovation in this field (such as patents and other proxies for technological upgrading), and the pros and cons of the various available methodologies. The presentations and related discussions contributed to the setup of a more detailed research agenda as well as to the selection of study cases that will take place in the region over the coming months.
Redefining future development
Since the time of Adam Smith, several scholars have put forward the idea that natural resources, especially mining resources, cannot be an effective means for sustained economic growth. Yet, various cases of industrialisation show that knowledge-intensive suppliers have actually played a fundamental role in this process.
Moreover, this has prompted a shift of perspective in development strategies. It is not about mineral production per se but rather how mineral production takes place, including what technologies are used and who employs them. Ultimately, the more local suppliers engage in hi-tech activities, the more jobs can be created, the better and cleaner mining activities are, and the more competitive countries become. These positive spillovers are fully in line with Sustainable Development Goal#9: A process of industrialisation that is both inclusive and sustainable.
This workshop was an excellent example of how the understanding of development processes is changing as part of the digital revolution. The event underscores how multilateral organisations, research centres, and other stakeholders can contribute to the realisation of Goal#9. This is good news not only for Latin America but also for other mineral-abundant countries in search of more inclusive and sustainable paths of growth.
The event was hosted and led by Prof. Carlo Pietrobelli, who is heading the project at UNU-MERIT, and Gabriel Casaburi, Director of the Competitiveness, Technology, and Innovation Division at the Inter-American Development Bank. Also present were consultants and researchers from UNU-MERIT, the Graduate Institute for Policy Studies, Roma Tre University, the World Intellectual Property Organization (WIPO), the Organisation for Economic Cooperation and Development (OECD), the Duke University Global Value Chains Centre, the Institute of Development Studies, the UN Economic Commission of Latin America and the Caribbean (ECLAC), and representatives from the mining sector.
A post co-written by PhD fellow Beatriz Calzada Olvera.
Prof. Carlo Pietrobelli, UNU-MERIT and University Roma Tre
We’re starting a new research project, financed by the IDB, where UNU-MERIT will take the lead and direct, orient and define the methodology and the research questions.
This all relates to the issue of mining value chains and innovation and we take this from the perspective of developing countries from Latin America. We ask to what extent the mining sector could represent an engine of growth through the use of science, the use of technology, the development of providers in innovative ways that can better benefit from being part of these sectors that are so important in the Latin American mining sector.
The new approach is really moving beyond the macro-economic assessment of the relevance of the mining sector in Latin America. It looks at the potential of the mining sector for developing linkages with local economies, how large firms can interact with local suppliers, with local intermediaries, how knowledge can flow, and how this can open opportunities for learning and innovation in local suppliers.
In the economic literature, the mining sector is often considered as a curse for developing countries because of the corruption it generates, because of the macro-economic effects that tend to promote a process of de-industrialisation in the countries. With the advent of new scientific discoveries and new forms of organisation of inter-firm relationships — known as value chains — there may be new opportunities for the mining sector in developing countries.
The mining sector clearly plays a huge role in Latin America. Most countries in the region are in one way or another mining countries. Large shares of the GDP are represented by the mining sector as well as exports and employment.
We convened this workshop which is a 3-day kick off methodological very informal workshop with experts from all over the world, the OECD, the IDB, the Universities of Duke, Sussex, Rome and experts from the mining industry as well. We gathered this group to get their support and their ideas on how to best structure the methodology of the rest of the work. The project will then involve teams in different countries across the region to carry out detailed field work analysis, inspired by the methodology that we are discussing here.
Some PhD fellows at UNU-MERIT are writing their dissertations on mining, on value chains, on innovation-related natural resources, and some are usefully contributing to the workshop. Some of them presented literature reviews that were very useful and instrumental to the project. I hope that some of them will benefit from the project by getting useful data, inspiration, and useful contexts to continue with their dissertations.
Mauricio Cespedes, UNU-MERIT PhD fellow, Bolivian Vice Ministry of Science & Technology
My work in Bolivia focuses on the exploitation of lithium in the country and it is related to my thesis project. I need to map the global value chain of lithium, so I want to find out what exactly is happening in this field across South America. In particular I’m looking for the best methodology to map the value chain of lithium.
Many of the latest studies suggest that lithium is going to be the future storage of energy. But many people are asking if we should really produce more batteries. For me this workshop is the perfect mix of research and field knowledge.
Fernando Vargas, UNU-MERIT PhD fellow
I’ve been involved in Latin American science, technology, and innovation research and policy for several years. The theme of this project is very much connected to my own research agenda.
One of the questions I am dealing with is how countries can make better use of their natural resources to pursue higher economic growth rates. My research also covers the innovation of firms, especially in the copper mining sector — so that all fits very well.
At UNU-MERIT we’re working to develop and provide a methodology to the IDB. With that methodology the IDB will issue a call for country teams in Latin America. Then we’re going to provide technical support, overseeing the research studies, and later we’ll do the follow up. From the results and conclusions provided by the country teams we’ll try to build a tool to compare countries and then provide recommendations for the IDB and policymakers across the Latin American region. We’re going to be involved in this project for the next 1.5 to 2 years.
Gabriel Casaburi, Inter-American Development Bank
A national of Argentina, I work with the Inter-American development Bank in a division called Competitiveness and Technology and Innovation. We work with Latin American governments, providing loans and services and generating and disseminating knowledge on the three areas of my division.
We’ve received funding from the Canadian government to do research on global value chains related to mining operations. In order to increase our knowledge on this topic, we are going to recruit three different research / case studies in the region to find out more about the structure of mining value chains and what type of innovation is going on in the chain.
We have asked UNU-MERIT to help us design the best way to go about hiring these research teams. So in fact, this event is a kind of launching workshop for the entire project. As the team leader of the project at the IDB, I am here to learn from the experts gathered and to tell them what it is that the IDB wants to achieve with this project and what we need.
UNU-MERIT has a long tradition of research in innovation and in global value chains. We know some of the researchers here and we thought it was the best institution to help us design this project. That’s the reason why we did the workshop here rather than in Latin America. Most of the researchers were here so it was more convenient for us to organise it here.
The main purpose of the workshop at this stage was to open up all the possible ways to go about this project. The workshop has increased my awareness about the different ways we can go about doing this research project. I didn’t know that this methodological knowledge was out there. My most important take-away is that I know now what exact contributions two or three different methodologies can do for our project.
The opinions expressed here are the authors’ own; they do not necessarily reflect the views of UNU.
Sueli Brodin / UNU-MERIT; Flickr / Clod; Attraction Voyages Bolivie