Native Notes

Lately I’ve been reading several United Nations Conference on Trade and Development reports. Here are some excerpts from The Least Developed Countries Report 2007: Knowledge, Technological Learning and Innovation for Development that are relevant to the discussions on transitioning to a knowledge economy at the recent Third Annual Tribal Energy Policy Roundtable organized by the International Institute for Indigenous Resource Management:

·    The dominance of the mineral industry’s Foreign Direct Investment, (FDI) inflows into Least Developed Countries (LDCs) since the 1990s has consequences for the impacts that they can have on domestic technological capability accumulation. Typically, Transnational Corporations’ (TNCs’) mineral extraction activities in those countries are capital-intensive, have little impact on employment, are highly concentrated geographically, have high import content and result in exports of their output as unprocessed raw materials. Most of those operations are totally owned by foreign investors (rather than joint ventures) and a large share of their foreign exchange earnings is retained abroad. Those operations are strongly integrated internationally, but weakly embedded into domestic economies, as they have few forward and backward linkages in host economies (UNCTAD, 2005). In other words, they tend to operate as enclaves.

·    The potential of those FDI inflows to contribute to domestic technological capability-building in host countries is, therefore, very limited. In fact, there is little evidence that the entry of TNCs into mining in those countries is leading to the technological upgrading of domestic firms in the same industry. Where some intermediate technology potentially useful for small- and medium-scale miners has been developed for secondary processing purposes, its distribution and assimilation within the mining community have been limited.

·     Enhancing the contribution of the mining industry and its TNCs to knowledge accumulation in host countries has not been among the objectives of host countries, owing to the narrow sectoral focus adopted (as opposed to a broader developmental perspective). The goal of generating technology spillovers has generally not been actively pursued, nor has it been an unintended consequence of increased TNC activity. There are few indications that increasing FDI inflows into the oil and hard rock mining industry of African LDCs have been accompanied by greater knowledge flows to those countries beyond the activities of the TNCs themselves.

The Report can be accessed at: http://www.unctad.org/en/docs/ldc2007_en.pdf.