Mining services suppliers in Chile: A regional approach (or lack of it) for their development

Abstract

Global changes to the mining industry, such as the increasing demand in China and India for commodities and the trend for large companies to outsource non-core services, pose interesting business and development opportunities for mining suppliers, and hence for the strengthening of backward and forward linkages from the mining industry. Recently, the debate around mining as an enclave economy and the difficulty of developing the local industry has been revitalized. Thus, it becomes relevant to assess to what extent Chilean public policies implemented in recent years have contributed to strengthening the local development of forward and backward linkages. In this paper, following Pike et al. (2016), Morris et al. (2012) and Atienza et al. (2018) we develop a threefold analysis at this regard: a revision of industry public policies; an analysis of the suppliers’ industry evolution; plus case studies.We find that although backward and forward linkages are noted as a key orientation for program implementation, the strategic guidelines are excessively broad and do not count with specific industry and regional instruments for leveraging resources towards local industry needs. Our analysis at the level of the industry shows that in recent years supplier industry sales volume, exports, and the number of firms and their size have all decreased. Moreover, this general landscape is reinforced by our case studies, which in all detailed measures of linkages have shown no systematic improvements (many have decreased or stagnated).