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Technology, geography, and diversification in a small mineral economy

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  • Lufin, Marcelo
  • Soto-díaz, Juan

Abstract

When should a policymaker promote economic diversification in resource-rich regions? What are the necessary structural economic conditions for such policies to work? How compatible are regional and national strategies of diversification? This study focuses on the general equilibrium properties of policies that aim to diversify the economic structure of regions through productive linkages with the resource sector. Using Chile, a major mineral exporter, as a case study, and exploiting variation induced by the expansion of the mining industry and the commodity prices super-cycle, we analyze how a shock in the resource sector affects other sectors and regions through productive linkages. The results are utilized in simulating the economic conditions under which regional diversification is an optimal strategy for resource-based economic development. Our results support the need for a multiscalar approach for resource-driven economic development policies by showing that optimal outcomes of diversification policies on economic growth are found when policies combine regional, sectoral, and national strategies for development.

Suggested Citation

  • Lufin, Marcelo & Soto-díaz, Juan, 2022. "Technology, geography, and diversification in a small mineral economy," LSE Research Online Documents on Economics 115013, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:115013
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    File URL: http://eprints.lse.ac.uk/115013/
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    References listed on IDEAS

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    More about this item

    Keywords

    mining; diversification; productive linkages; technological change; regional development; Mining; Productive linkages; Technological change; Regional development; Diversification;
    All these keywords.

    JEL classification:

    • N0 - Economic History - - General
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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