Natural Resources and Divergence : A Comparison of Andean and Nordic Trajectories

"Why are some resource economies wealthy and some not? The best way to answer this is through careful comparative research, but such studies are very rare. By exploring Andean and Nordic experiences with natural resources, this book is a breakthrough. It takes the analysis of resources and growth to a new level." - Kristine Bruland, University of Oslo, Norway "Natural resource dependence has been seen as a kind of curse in Latin American economic history vs. a great asset in the story of several developed countries. This book makes a very interesting comparison of the economic histories of Andean and Scandinavian countries to understand why they show contrasting development patterns. It makes an important contribution to comparative economic history and to our understanding of economic development." - José Antonio Ocampo, Columbia University, USA Is the 'natural resource curse' destiny? Are different ways to link natural resources and economic development? Using two particular regions as case studies, this edited collection examines the divergent development paths of natural resource rich countries over the past two centuries. Bolivia, Chile and Peru are neighbour states with a common history and are globally known by their mining endowments. Norway and Sweden have also a strong common history, and different natural resource endowments (forestry, mining and fishing) are essential to understand their current economic success. By comparing natural resource management in the long run in these two divergent regions, this book can help rethink how developing countries can better take advantage of their natural resource endowments. Specifically, the book examines the interaction between natural resources and different key determinants of long-term development: trade, fiscal policy, sustainability, human capital accumulation and business strategies. Cristian Ducoing is Researcher at the Department of Economic History, Lund University, Sweden. José Peres-Cajías is Assistant Professor at the Department of Economic History, Institutions, Politics and World Economy, University of Barcelona, Spain Acknowledgements 6 Praise for Natural Resources and Divergence 8 Prologue 9 Contents 14 Notes on Contributors 16 List of Figures 20 List of Tables 26 1 Introduction 29 References 35 2 Globalization and Natural Resource Abundance: Is Export Diversification Possible? A Comparison of Export Composition in Chile and Norway, 1870–2017 37 1 Introduction 37 2 Methodology 40 3 Chile and Norway in the Long Run 44 4 Chilean and Norwegian Exports in the SITC Classification 48 5 The Technological Content of Chilean and Norwegian Exports 56 6 Higher Precision to Understand Complexity Differences in Chile and Norway from the 1990s 62 7 Conclusions 63 Bibliography 65 3 Copper Prices and Heterogeneity: The Chilean and Norwegian Cases, 1850–1913 69 1 Introduction 69 2 Global Copper in International Markets 70 3 International Prices for Copper 73 4 A New Price for Chilean Copper 78 5 A New Price for Norwegian Copper 86 6 Conclusions 90 Bibliography 91 4 Successes and Failures of the “Modern Rebellion” in an Export Economy: The Case of the Peruvian Mining in the Twentieth Century 95 1 Introduction 95 2 The Formation of an Export Economy 97 3 Export Cycles in the Twentieth Century 103 4 Mining Exports 108 4.1 Mining Modernisation at the Start of the Twentieth Century 110 4.2 Mining Between the Great Depression and Nationalisation 1930–1970 118 5 The “Modern Rebellion” 121 6 Reflections on the Impact of Mining on the Economy as a Whole 132 References 137 5 The “Fiscal Contract” in Andean and Nordic Countries, 1850–2010 141 1 Introduction 141 2 The Collection of Public Revenues, 1850–2010 144 3 The Transition from Ancien Régime to Liberal Taxes 147 4 The Rise and Decline of Trade Taxes 153 5 Modern Direct Taxation and Fiscal Citizenship 156 6 From Particularistic to General Consumption Taxes 160 7 Conclusions 163 References 165 6 Population, Biological Welfare and Human Capital in Norway, Sweden, Bolivia, Chile and Peru During the Nineteenth and Twentieth Centuries 170 1 Introduction 170 2 Population: General Trends 173 3 Infant Mortality, Life Expectancy and Height 179 4 Human Capital: Schooling, Literacy and Numeracy 185 5 Conclusions 188 References 189 7 Engineers and the Knowledge Gap Between Andean and Nordic Countries, 1850–1939 195 1 Introduction 195 2 Literacy and Basic Education 200 3 The Innovative Potential: Engineering Faculties 204 4 The Innovative Potential: Engineering Graduates 212 5 Effective Innovation: Patents Systems and Patents Granted 215 6 The Innovative Capacity: The Stock of Mining Engineers 218 7 The Innovative Capacity: The Role of Indigenous Engineers in Their Economies 224 8 Conclusions 231 Appendix: Foundation of Mining and Engineering Schools from 1700 to 1910 232 References 240 8 Oil and Industry in Norway and Brazil 245 1 Introduction 245 2 The Pioneering Years 248 3 Large Areas Are Advertised 251 4 Poor Explorers or Poor Concessions? 252 5 Building Local Industrial Capacity 256 6 The Crises 259 7 Local Content 265 8 Rent Seeking 270 9 Lessons? 275 References 279 9 Weak Sustainability Trends in the Andean and Nordic Countries: A Historical Perspective 283 1 Introduction 283 2 Methods and Data 285 3 Genuine Savings as an Alternative Measure of Development 288 4 Estimating the Long Run Sustainability Trends of Andean and Nordic Countries: The Case of Chile and Sweden 290 4.1 Chile 290 4.2 Sweden 293 4.3 Comparative View 295 5 A Week Sustainability Analysis for Andean and Nordic Countries 296 6 Conclusions and Further Research 300 References 301 10 Different Drivers Behind Corporate Environmental Policies: The Case of the Swedish and Chilean Copper Industry 305 1 Introduction 305 2 The Copper Industry in Sweden and Chile in Context: A Brief Historical Background 307 3 Copper Production and Environmental Consequences 311 4 The Greening of Copper: Environmental Regulation and Industry Responses 313 4.1 Greening from the 1960s–1990s 316 4.2 1990s—Globalisation and the Greening of the Chilean Copper Industry 321 5 Concluding Remarks 324 References 326 11 Conclusions 330 1 Exports and Diversification 332 2 National Firms, Human Capital and the State 333 3 Linking the Past with the Future: New Development Indicators and Sustainability 334 4 History Matters. an Agenda for Research on Natural Resources and Development 335 References 337 Index 339 "Why are some resource economies wealthy and some not? The best way to answer this is through careful comparative research, but such studies are very rare. By exploring Andean and Nordic experiences with natural resources, this book is a breakthrough. It takes the analysis of resources and growth to a new level." - Kristine Bruland, University of Oslo, Norway "Natural resource dependence has been seen as a kind of curse in Latin American economic history vs. a great asset in the story of several developed countries. This book makes a very interesting comparison of the economic histories of Andean and Scandinavian countries to understand why they show contrasting development patterns. It makes an important contribution to comparative economic history and to our understanding of economic development." - José Antonio Ocampo, Columbia University, USA Is the 'natural resource curse' destiny? Are different ways to link natural resources and economic development? Using two particular regions as case studies, this edited collection examines the divergent development paths of natural resource rich countries over the past two centuries. Bolivia, Chile and Peru are neighbour states with a common history and are globally known by their mining endowments. Norway and Sweden have also a strong common history, and different natural resource endowments (forestry, mining and fishing) are essential to understand their current economic success. By comparing natural resource management in the long run in these two divergent regions, this book can help rethink how developing countries can better take advantage of their natural resource endowments. Specifically, the book examines the interaction between natural resources and different key determinants of long-term development: trade, fiscal policy, sustainability, human capital accumulation and business strategies. Cristian Ducoing is Researcher at the Department of Economic History, Lund University, Sweden. José Peres-Cajías is Assistant Professor at the Department of Economic History, Institutions, Politics and World Economy, University of Barcelona, Spain