"The possible dynamic role of natural resource-based networks in Latin American development strategies"


2014 (with A. Marín and L. Navas-Aleman) "The possible dynamic role of natural resource-based networks in Latin American development strategies" in Dutrénit, G. and J. Sutz (eds), Innovation Systems For Inclusive Development: The Latin American Experience, Ch. 13. Cheltenham: Edward Elgar.
 
Download: Perez_Marin_Navas-Aleman _Dynamic_role_of_NR_FINAL_FINAL.pdf (1.50mb)

Abstract:


This paper explores the potential of natural-resource (NR) based networks for serving as platform for development strategies. The main argument against such potential use is the claim that they have low technological dynamism. If that were the case, natural resources would indeed be incapable of serving as core of a development effort. The paper holds that the changes induced by the ICT paradigm in the organization of global corporations, the process of globalization of production and the hyper-segmentation of markets have profoundly modified the conditions in all sectors, including natural resources. It analyses the recent and prospective forces driving innovation towards the “decommoditization” of the natural resources themselves as well as the conditions that are making it more likely to weave networks of innovation up and downstream as well as laterally from the natural resource base, constructing a production and innovation network.
 

Table of Contents:


1. Introduction
2. The ahistorical case against natural resources in development
3. Re-introducing history and focusing on networks
4. The new (and renewed) forces creating innovation opportunities in natural resource-based networks
MARKET VOLUME: Growing demand as intensifier of the endogenous drivers of technological innovation in natural
resources
MARKET REQUIREMENTS: The changing shape of markets inducing “demand pull” product innovation
GENERALISED ICT AND OTHER S&T ADVANCES: Innovation opportunities based on all-pervasive ICT and new
radical technologies in gestation
THE MARKET CONTEXT: Globalization and the environment as shapers of the strategic opportunity space
Changing Global Corporations
Improving negotiation strategies of developing countries
Opportunities opened by environmental concerns
5. Natural resource-based networks as a platform for development: The potential and the risks
Succeeding in a global context
Overcoming social inequality
Taking the environmental risks seriously
Overcoming the traditional obstacles
Preparing for a leap in the future
Conclusion: The risk of missing the opportunity
References

Introduction:


The success of the four Asian Tigers in catching-up in development and the major growth leaps of China and India have posed a double challenge to the Latin American countries. It demonstrates that development is achievable; however the window of opportunity used by the Asian countries is no longer available to newcomers. It is then necessary to identify a viable technological opportunity space and to develop an adequate strategy for taking advantage of it. Given the rich endowment of natural resources enjoyed by the region, and the accumulated experience in the exploitation of these resources, this paper approaches the question of whether natural resource (NR) based industries, together with the processing industries, can provide such a space for innovation, in which case, they could serve as a platform for successful development strategies.

In line with the neo-Schumpeterian and evolutionary tradition we start from the idea that some industries offer more opportunities for innovation and dynamism than others, and that in the past NR industries have not been in the list of industries with higher opportunities. However we believe that the reasons for this view are largely historical, i.e. they are mostly linked to the manner in which these industries developed since the 1920s (within the mass production paradigm) and to the typical behavior of Multinational Corporations (MNCs) active in the raw materials sector during the 20th Century. In our view these conditions are changing. NR based industries and their user-markets are becoming more dynamic. Instead of remaining a multidimensional ‘curse’ and a constraint on development, they may become the basis for a technologically dynamic and sustainable development strategy. This is crucial for most developing countries that rely heavily on exports of primary goods. Three quarters of the states in Sub-Saharan Africa and two thirds of those in Latin America (LA), the Caribbean, North Africa and the Middle East still depend on primary commodities for at least half of their export income. And this question is all the more relevant, given the fact that globalization has up to now concentrated fabricating production in Asia.

The paper is organized as follows. Section 2 is a brief overview of the main arguments in the literature contributing to the generalized perception that natural resources are unsuitable as a platform for development. Section 3 identifies the changes in the world economy that are enlarging the opportunity space for innovation and dynamism in all sectors, including natural resources. It also argues that these changes imply widening the analysis from the primary product to the whole network of activities up and downstream, from the initial investment to the final user. Section 4 discusses the forces that are now driving or influencing innovation in the natural resource-based networks and defining a new opportunity space for dynamism. The concluding section summarizes the argument for a strategy based on combining natural resources with technology in this particular period, with a brief discussion of the main challenges and risks facing policy makers when engaging in such a strategy, including the need for a complementary strategy to overcome social inequality.
 
Figure 1. Innovative interactions in a natural resource-based network
 


Figure 2. Forces driving innovation in natural resource-based production networks
 

 
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