What is the potential of natural resource based industrialisation in Latin America? An Input-Output analysis of the extractive sectors
Beatriz Calzada Olvera & Neil Foster-McGregor
#2018-015
Several case studies have analysed the potential of natural resource
(NR) based industrialisation, a process based on diversification towards
high value-added products, in the Latin American region. However, there
is limited evidence on how the development of productive linkages - a
key aspect of this strategy - behave at the country level. Based on
input-output analysis, this paper provides a clearer picture of the
extent and evolution of productive linkages of NR sectors across a
sample of middle- and high-income countries in Latin America as well as
in other developing and developed regions. The paper focuses on the
degree to which extractive industries, i.e. oil, gas, and mining, are
connected to the rest of the economy by studying both backward and
forward linkages using OECD IO data. It also makes a distinction between
local and foreign inputs to account for the level of integration that
these sectors have into global value chains and/or import dependence.
Furthermore, it tries to identify whether the importance of the
extractive sectors in exports and total economic output is related to
the level of intersectoral linkages. We find that in most countries
intersectoral linkages have become smaller despite the expansion of the
extractive sector suggesting a higher level of enclaveness as predicted
by the resource curse literature.
JEL Classification: O13, O14, 054, O57, L71, D57
Keywords: natural resources, Latin America, mining, extractive, resource
boom, industrial linkages