"The possible dynamic role of natural resource-based networks in Latin American development strategies"
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 organisation of global corporations, the process of globalisation 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 "decommoditisation" 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, which is taken as the unit of analysis. Finally it looks at the conditions under which full advantage could be taken of this potential for both development and poverty alleviation strategies. The paper uses evidence from case studies to illustrate how some of these transformations are already taking place in Latin America.
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 resourcesMARKET REQUIREMENTS: The changing shape of markets inducing "demand pull" product innovationGENERALISED ICT AND OTHER S&T ADVANCES: Innovation opportunities based on all-pervasive ICT and new radical technologies in gestationTHE MARKET CONTEXT: Globalisation and the environment as shapers of the strategic opportunity space
Changing Global CorporationsImproving negotiation strategies of developing countriesOpportunities opened by environmental concerns
5. Conclusion: NR-based networks as core of a development strategy for Latin America - Potential, requirements and risks
The potential: Natural resources can be a platform for a development strategyThe requirements: Role of the State and embedded autonomyThe risks: Missing the boat and intrinsic perils
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, we ponder the questions (a) whether natural resource (NR) based industries together with the processing industries, provide such a space for innovation and (b) whether they could serve as a platform for successful development strategies. This paper answers the first question positively and opens the space for answering the second one.
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 behaviour of raw materials Multinational Corporations (MNCs) 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, which 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.
The paper is organised as follows. In section 2 we discuss the main arguments in the literature contributing to the generalised perception that NRs are non- dynamic activities, and therefore not good for development. In section 3, we discuss the changes in the world economy that are enlarging the opportunity space for innovation and dynamism in all sectors, including natural resources. We also argue, that these changes demand that the analysis should no longer be restricted to the primary product, but rather to encompass the whole network of activities up and downstream, from the initial investment to the final user. In section 4 we discuss the forces that are driving or influencing innovation in the natural resource-based networks in this particular period and which are defining a new opportunity space for dynamism. Finally, in the concluding section, we offer a summary of the argument for a strategy based on combining natural resources with technology in this particular period, and we discuss the challenges and risks facing policy makers when engaging in such a strategy.
'...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