Rudolf M. Buitelaar, ECLAC

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Mining and Local Economic Development
Rudolf M. Buitelaar, ECLAC Washington, October
29, 2001
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Contents of the presentation

• The ECLAC/IDRC Mining Clusters research
• The problem
• Hypothesis and Methodology
• Case Studies
• Findings

• A proposal for action the Antofagasta project

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A. Mining and development the problem
Three arguments why mining is bad for
development Declining terms of trade Few
linkage effects Little learning
Evidence is not conclusive authors agree that
mining per sé is not the problem inadequate
policies are
Why a cluster approach? Because it analyzes
evolution and upgrading of processes, products,
functions and sectors
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A. Hypothesis and methodology
Prospects for upgrading depend on intensity of
local learning through interaction
Cluster approach is useful because it is flexible
to accommodate different realities and spurs
action
Case studies explore in different settings What
can be learned from mining? What can be done to
improve local capacity to learn from mining, to
innovate and upgrade?
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A. Mining clusters the case studies (1)
0. Canada a positive example
1. Chile a. One environment, Divergent firm
strategies b. Lessons from innovations in
Leaching c. Buyer-supplier chain unequal power
2. Peru a. Cultural differences in Cajamarca b.
Southern Peru results of a long relation c.
Tamboraque collaboration is possible
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A. Mining clusters the case studies (2)
3. Bauxite in Pará, Brasil Local learning and
spin-offs
4. Oruro, Bolivia Beyond the Bust
5. Segovia-Remedios, Colombia Collaboration and
conflict
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A. Mining clusters the findings (1)
1. Mining is technology-intensive
2. Strengthening local capabilities to learn,
innovate and upgrade is only way to combine
mining success with sustainable local economic
development
3. Why doesnt it happen?
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A. Mining clusters the findings (2)
4. Mining clusters in Latin America are bipolar
and heterogeneous market forces work badly
5. They lack a shared strategic vision and
trust among agents and hence local institutions
are weak
6. In the long run, mining itself depends on its
ability to generate local development. In
some places, local development depends critically
on mining. A new social contract should be
possible. Making markets work and strengthening
institutions are keys.
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A. Mining clusters the findings (3)
7. Mining will not produce linkages in every
locality, but a positive impact on local
development should always be possible
8. Local provision of high-tech services often
precedes the development of local production of
goods
9. Mining can generate positive learning
effects e.g. regarding environmental management,
that can be applied outside mining
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B. An action plan the Antofagasta project
The Antofagasta region is Chiles mining capital.
Mining provides 2/3 of the regions GDP
A dozen big multinationals, one State firm, many
small miners and local suppliers typically form a
heterogeneous cluster.
Locals are skeptical about the contribution of
mining to local development but the Government
strategy aims to build on mining
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B. An action plan the Antofagasta project
A decentralized action plan is proposed with six
strategic initiatives
Coordination of Mining Cluster Project should be
with Regional Development Corporation, a
public/private NGO
Central idea is to produce information
and meetings
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B. An action plan the Antofagasta project
1. Coordinate public services
2. Make local buyer/supplier chain transparent
3. Promote new business opportunities
4. Foster University-Enterprise relations
5. Stimulate private contributions to Community
and Environment projects
6. Enhance multisectorial links