Upgrading in the Aluminium Value Chain and Resource-Driven, FDI-Facilitated Development

The resurgence in resource-seeking FDI in developing countries that occurred over the last three decades has highlighted the importance of the need to better understand the process by which developing countries achieve resource-driven, FDI-facilitated development. To reiterate, this study posits that FDI-facilitated development occurs when policy making and implementation are done in an institutional environment characterised by embedded autonomy. This is where highly efficient and autonomous bifurcated bureaucracies are embedded with an entrepreneurial and capable private sector. This study examines this relationship for resource-driven, FDI-facilitated development: it specifically analyses the extent to which resource-driven, FDI-facilitated development has occurred in the bauxite industry of Jamaica, Guyana and Suriname, and in the proposed aluminium industry of Trinidad and Tobago. However, before this analysis was undertaken, it was necessary to gain a deeper understanding of the structure and dynamics of the international aluminium industry. To this end, the value chain framework was employed. The analysis of the international aluminium industry reveals that several bauxite-rich developing countries, notably those in the Caribbean, are still relegated to the low value-added upstream segments of the aluminium value chain. They are challenged to become involved in the high value-added downstream activities, that is, to upgrade the nature and type of activities they currently perform.