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

Beatriz Calzada Olvera and Neil Foster-McGregor

No 2018-015, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (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.

Keywords: natural resources; Latin America; mining; extractive; resource boom; industrial linkages (search for similar items in EconPapers)
JEL-codes: D57 L71 O13 O14 O54 O57 (search for similar items in EconPapers)
Date: 2018-02-27
New Economics Papers: this item is included in nep-hme
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Citations: View citations in EconPapers (3)

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