Musa- Week 8_ Resource Based Industrialisation path

Musa- Week 8_ Resource Based Industrialisation path -...

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Resource-based Industrialisation Path Musa Nxele 17 September 2015
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Outline 1. The concept of linkages 2. Linkage development 3. Factors that determine nature, extent, and location of these outsourced linkages
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1. The concept of linkages
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Question How does Hirschman provide us with a conceptual approach to posit a “resource based industrialisation path”?
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Background 1. The familiar routes to industrial growth are now more problematic: ISI policies are less attractive and constrained by rules of global governance Export-oriented industrialization more difficult given China (& other Asian exporters) Reference: ‘One Thing Leads to Another,’ Chapter 2, pp. 45
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Background 2. Enclave theory is problematic. It is based on: Outdated (understanding of ) corporate strategies Outdated data: significant accretion of capabilities in many low- income countries Biased results, as it is more often that the industrial sector in these countries was a priori underdeveloped Reference: 1. ‘One Thing Leads to Another,’ Chapter 2, pp. 45 2. Morris, M., Kaplinsky , R., & Kaplan, D. (2012). “One thing leads to another” – Commodities, linkages and industrial development. Resource Policy, Vol.37, pp.409
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Considering resource-based industrialisation Synergistic links between manufacturing and the resources sector: Canadian manufacturing arose in large part from linkages to the export of fish, fur, timber and minerals commodities sectors Sweden’s industrialisation was driven by export booms in cereals, wood, pulp, paper, iron ore Also evidence of synergy in US manufacturing (19 th 20 th centuries), and Australia’s & Norway’s (recently) too Reference: 1. Morris, M., Kaplinsky , R., & Kaplan, D. (2012). “One thing leads to another” – Commodities, linkages and industrial development. Resource Policy, Vol.37, pp.409
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Evidence of synergistic links between manufacturing and the resources sector Positive and interactive symbiosis Both directions; capabilities developed in each feed back to the other
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Hirschman’s framework of linkages There are linkages from the commodities sector that provide a path for industrial development Three sets of linkages from the commodities sector: Fiscal : corporate taxes, royalties, taxes on the incomes of employees Can be used to promote industrial development in other sectors Consumption : demand for output of other sectors from income earned Production : forward linkages, backward linkages, [& horizontal linkages] Reference: 1. Morris, M., Kaplinsky , R., & Kaplan, D. (2012). “One thing leads to another” – Commodities, linkages and industrial development. Resource Policy, Vol.37, pp.414
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