Financial mechanism to invest in knowledge from natural resource revenues: Experiences from Bolivia, Chile, Colombia and Peru

In resource-rich emerging countries, management of revenues from natural resources (NR) plays a critical role in transforming their economies. In this paper, a conceptual framework is constructed for an institution to promote the economic diversification through investing in knowledge, based on the literature from management of natural resources, industrial policy and public management. Existing financial mechanisms in Bolivia, Chile, Colombia and Peru, where NR revenues are invested in knowledge to enhance productivity (natural resources for knowledge, or NR4K funds), are examined applying the framework. The analysis identified that NR4K in these countries currently fall short of achieving their intended purpose of transitioning their economies toward increased diversification. These require complementary public policies to enhance capabilities, coordinate between stakeholders and initiate experimental investments.

Keywords: Natural resources, STI policy, Natural resource fund, NR4K, Latin America, Bolivia, Chile, Colombia, Peru

JEL Classification: P48, P51, O38, O21, O54