"The new context for industrializing around natural resources: an opportunity for Latin America (and other resource rich countries)?"


The Other Canon and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics; Working Paper no. 62.

Link: 2015070612040808.pdf (2.99mb)

Abstract:


This chapter argues that development is a moving target, and that windows of opportunity to both ‘catch up’ and ‘leap ahead’ present themselves at certain times and in specific regions due to technological revolutions and paradigm shifts. Having examined the historical precedents, it observes that the exploitation and processing of natural resources (NR), once seen as a ‘curse’ for developing nations, present such an opportunity for Latin America and other resource-rich countries at this stage in the diffusion of the ICT revolution. The factors changing the context and conditions around NR are analyzed, from the new nature of markets and the growing influence of environmental factors to the significant increase in technological dynamism and potential for innovation in developing countries brought about by ICT and market segmentation. Examining the specificity of Latin America in its ability to respond to these different conditions, and identifying the capabilities gained in the previous opportunity with import substitution, the article argues that success today would depend upon building natural resource-based networks of innovation aimed at the dynamic Asian markets. Given the low labor intensity of most NR processing industries, a dual-integrated strategy of ‘resourceintensive industrialization’ is proposed which promotes both top-down economic growth for global positioning and bottom-up wealth creation in each corner of the territory generating employment and well-being for all. It is finally argued that such a converging process of growth and innovation is both possible and necessary to ensure that Latin America benefits from the current window of opportunity while building a platform of innovative potential, networks and social capabilities in order to be able to leap forward with the next technological revolution. The many obstacles and limitations are not ignored; they can only be faced successfully if the nature of the opportunity is fully recognized.

Table of Contents:


As technology changes, so do opportunities 
The lessons and legacy of the recent past - Growth with the ISI model 
Historically changing views on natural resources: from blessing to ‘curse’ and back? 
How has the context changed for natural resource producers?: Revisiting the potential for technological catching-up 
A change in natural resource price levels 
The new hyper-segmented nature of all markets 
Ample pathways to information and global markets through ICT 
A shift in behavior: from the old MNC to the global corporation (GC) 
Can Latin America hitch its car to Asian growth? 
The importance of networks as systems of innovation 
The forces driving innovation in the natural resource networks 
Growth in market volume 
Changing market requirements 
Changes in the market context 
Advances in ICT and other technologies 
A dual integrated strategy 
Conditions of viability: the challenges and the obstacles 
The need for adequate capabilities and vision to make the double leap 
Facing probable competition 
Traditional obstacles and new uncertainties 
A political and policy challenge 
References  

Introduction:

 
Those who doubt the potential dynamism of natural resources (NR) assume that there are truths about certain sectors that do not change over time. This is reflected in much of the literature on development, and has filtered into the beliefs of policy makers. Yet evolutionary economists hold that technological change is at the very heart of economic growth, with constant shifts in the relative dynamism of companies, industries and sectors. And indeed, even a cursory glance at the natural resources sector reveals that the context has significantly changed since the postwar period, when many of the current ideas about development evolved. The character of energy, materials and food markets has shifted dramatically; the potential for innovation in developing countries is much greater than before; all markets have segmented into niches; global corporations have changed their behavior; and, last but not least, environmental factors have come into play as a challenge and as a growth opportunity for both developed and developing nations.
 
This paper will examine the implications of such technological changes for resource-endowed countries, building on the notable shift in the level of awareness, both in theory and in practice, of the role of innovation in growth and development. In line with the neo-Schumpeterian and evolutionary tradition, the article starts from the idea that some industries3 , in some periods, offer more opportunities for innovation and dynamism than others. It will argue that the reasons for not seeing the natural resource industries among those with higher opportunities for most of the twentieth century are largely historical and that the context has changed significantly.
 
Publications
 

"TECHNOLOGICAL REVOLUTIONS AND FINANCIAL CAPITAL:The Dynamics of Bubbles and Golden Ages"

Published 2002

'...the book fills an important gap in the literature on business cycles and innovations. I most strongly commend it to all those attempting to understand the past and future evolution of technology and the economy.'

Christopher Freeman, Emeritus Professor, SPRU,
University of Sussex, UK

'...Carlota Perez shows us that historically technological revolutions arrive with remarkable regularity, and that economies react to them in predictable phases. Her argument provides much needed perspective not just on history, but on our own times. And especially on our own information revolution.'

W. Brian Arthur, Santa Fe Institute, New Mexico

‘For contents page, selected extracts and further details, click here’.

Technological Revolutions Financial bubbles Installation Period Frenzy Deployment Period Golden Ages Dual strategy Techno‑economic paradigms Neo‑Schumpeterian Respecialization Synergy Turning Point Future markets Knowledge society Green growth Maturity Full global development Globalization Sustainability Socio‑economic development Paradigm shifts Irruption Market hyper‑segmentation