Suppliers’ entry, upgrading, and innovation in mining GVCs: lessons from Argentina, Brazil, and Peru

This paper studies whether the mining sector can represent a true engine of growth for selected Latin American countries through the suppliers’ entry and upgrading within mining value chains. We start by using international trade data to study where mining value is added and how rents are distributed across countries. Despite their importance in the production and exports of copper ores and concentrate, the participation of the selected Latin American countries in copper value chains is still confined to the upstream segment. Moreover, their share of innovation relevant for the sector remains very limited, although new data on patenting and publications show that the sector is becoming increasingly innovative worldwide. Then, we use new microeconomic evidence from case-studies in Latin America to explore the specific opportunities and obstacles faced by mining suppliers in entering the value chain and upgrading within it, and how the regulatory and innovation systems have influenced this process. We show that barriers related to the contractual practices, lead firms’ attitudes, and the hierarchical industrial organization of the sector, coupled with the countries’ weaknesses in local innovation and regulatory systems, have been contributing to hamper suppliers’ entry into mining value chains and upgrading.