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What is the potential of natural resource based industrialisation in Latin America? An Input-Output analysis of the extractive sectors

Author

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  • Calzada Olvera, Beatriz

    () (UNU-MERIT)

  • Foster-McGregor, Neil

    () (UNU-MERIT)

Abstract

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.

Suggested Citation

  • Calzada Olvera, Beatriz & Foster-McGregor, Neil, 2018. "What is the potential of natural resource based industrialisation in Latin America? An Input-Output analysis of the extractive sectors," MERIT Working Papers 2018-015, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2018015
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    File URL: https://www.merit.unu.edu/publications/wppdf/2018/wp2018-015.pdf
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    References listed on IDEAS

    as
    1. Sebastian Sosa & Gustavo Adler, 2011. "Commodity Price Cycles; The Perils of Mismanaging the Boom," IMF Working Papers 11/283, International Monetary Fund.
    2. António Rua & Hugo Reis, 2006. "An input-output analysis: linkages vs leakages," Working Papers w200617, Banco de Portugal, Economics and Research Department.
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    Cited by:

    1. Calzada Olvera, Beatriz & Iizuka, Michiko, 2020. "How does innovation take place in the mining industry? : Understanding the logic behind innovation in a changing context," MERIT Working Papers 2020-019, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

    More about this item

    Keywords

    natural resources; Latin America; mining; extractive; resource boom; industrial linkages;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis

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