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Innovation in an Unfavorable Context: Local Mining Suppliers in Peru


  • Oswaldo Molina

    (Universidad del Pacífico)


Traditionally the Peruvian mining sector has been unfavorable for innovation by local suppliers. However, some firms have managed to innovate despite these conditions in recent years. The aim of this paper is to understand the factors and incentives that foster or hinder innovation in such a context. We identify and analyze the mechanisms that lead to innovative activities through the study of the experiences of a group of local suppliers. We pay special attention to the role of interaction between contractors and large mining companies in the framework of Global Value Chain theory, as well as to the way that suppliers take advantage of new opportunities in the sector. Evidence found shows that innovation by local suppliers in the Peruvian mining sector has a limited scope, characterized by three particular traits. First, local suppliers who manage to innovate are mainly incumbent firms whose experience in the market allows them to integrate into the high-tech stages of the production chain. Second, most of these firms maintain close relationships with important national or international companies in the mining industry, which direct innovation efforts through incentives and the transmission of knowledge. Third, the more important innovations seem to be concentrated in specific market niches, where there is less foreign competition because of their specificity to the Peruvian context.

Suggested Citation

  • Oswaldo Molina, 2017. "Innovation in an Unfavorable Context: Local Mining Suppliers in Peru," Working Papers 2017-96, Peruvian Economic Association.
  • Handle: RePEc:apc:wpaper:2017-096

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    References listed on IDEAS

    1. Nimark, Kristoffer, 2008. "Dynamic pricing and imperfect common knowledge," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 365-382, March.
    2. Dubravko Mihaljek & Marc Klau, 2001. "A note on the pass-through from exchange rate and foreign price changes to inflation in selected emerging market economies," BIS Papers chapters,in: Bank for International Settlements (ed.), Modelling aspects of the inflation process and the monetary transmission mechanism in emerging market countries, volume 8, pages 69-81 Bank for International Settlements.
    3. Maertens Odria, Luís Ricardo & Castillo, Paul & Rodriguez, Gabriel, 2012. "Does the exchange rate pass-through into prices change when inflation targeting is adopted? The Peruvian case study between 1994 and 2007," Journal of Macroeconomics, Elsevier, vol. 34(4), pages 1154-1166.
    4. Renzo Rossini & Marco Vega & Zenón Quispe & Fernando Perez, 2016. "Inflation expectations and dollarisation in Peru," BIS Papers chapters,in: Bank for International Settlements (ed.), Inflation mechanisms, expectations and monetary policy, volume 89, pages 275-289 Bank for International Settlements.
    5. Armas, Adrián & Vallejos , Lucy & Vega, Marco, 2011. "Indicadores tendenciales de inflación y su relevancia como variables indicativas de política monetaria," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 20, pages 27-56.
    6. Nkunde Mwase & Francis Y Kumah, 2015. "Revisiting the Concept of Dollarization; The Global Financial Crisis and Dollarization in Low-Income Countries," IMF Working Papers 15/12, International Monetary Fund.
    7. Adrian Armas & Lucy Vallejos & Marco Vega, 2010. "Measurement of price indices used by the central bank of Peru," BIS Papers chapters,in: Bank for International Settlements (ed.), Monetary policy and the measurement of inflation: prices, wages and expectations, volume 49, pages 259-283 Bank for International Settlements.
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    More about this item


    Mining; Peru; Innovation; Value Chain; Suppliers; Incumbent Firms;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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