The third edition of Red Sur’s Flagship Report “EXTRACTIVE INDUSTRIES AND SUSTAINABLE DEVELOPMENT: Challenges for Latin America and the Caribbean” provides information and analysis to better understand how extractive industries affect the economies of the region as well as the welfare of today’s citizens. It also examines if we are employing non-renewable resources to promote sustainable development, i.e. the welfare of future generations. Red Sur’s Flagship Report series on Natural Resources and Development dates back to 2014.
One out of every two dollars of Latin American exports is intensive in natural resources. Are we taking advantage of this pattern of international integration to promote sustainable development? To answer this question we must evaluate whether: (a) natural resources are exploited in a sustainable manner; (b) benefits are distributed equitably; and (c) we are enriching or impoverishing future generations.
Extractive industries contribute to economic growth in Latin America and the Caribbean, but their often negative social and environmental impacts cannot be ignored. There are plenty of opportunities for innovation and linkages in these industries, but taking advantage of them demands capabilities and resources that are not available in the region today. Policies and decision-making in this area are becoming increasingly sensitive and of interest to all citizens.
The change in global dynamics has reopened the debate on the benefits and costs of a development strategy based on natural resources. Therefore, the policy maker faces a number of challenging questions. The information presented here –organized by the different dimensions involved– aims to provide a comprehensive and up-to-date view to respond to these questions.
The payoff matrix of a development strategy focused on natural resources depends on the specific characteristics of each country. In an augmented version of what Carlos Diaz Alejandro called the “commodity lottery”, the decision maker must take into account that the performance will depend mainly on the interaction between the natural resource endowment and a set of idiosyncratic factors, from the institutional framework in which it operates and the existing rules and conventions, to the very story of what happened in the past in the incumbent country during booms and busts associated to natural resources. Therefore, in this section the analysis of the link between development and natural resources is done from the perspective of each of the countries in the region, trying to quantify —if possible— their performance on the various dimensions involved.