1887

OECD Trade Policy Papers

This series is designed to make available to a wider readership selected trade policy studies prepared for use within the OECD.

NB. No. 1 to No. 139 were released under the previous series title OECD Trade Policy Working Papers.

English

Local content policies in mineral-exporting countries

Resource abundance does not always bring sustained economic growth and development. Moreover, the mining sector generally provides little direct employment in the regions where extraction occurs. In an attempt to derive greater benefits from their resource endowments, and increase linkages with other parts of the economy, some minerals-rich countries have instituted local content and procurement policies (LCPs). The benefits sought include employment generation, supply chain development and technological and knowledge transfers. Measures that aim to increase local content and procurement in the extractive industries are common, including in many OECD countries.

This study examines local content policies in 10 minerals-rich countries and provides some observations about their efficacy and the desirability of their use. A wide range of measures are examined, from industry-wide, mandatory quantitative targets to voluntary initiatives undertaken at the firm level, encompassing diverse policy objectives and implementation strategies. The range of countries covered is broad including OECD countries, developing countries and least developed countries. The study does not recommend a “one size fits all” policy mix but guards against the distortions created by overly prescriptive, mandatory local content requirements.

English

Keywords: Local procurement, extractive industries, performance requirements, mining, supply chains
JEL: F1: International Economics / Trade; F13: International Economics / Trade / Trade Policy; International Trade Organizations; R11: Urban, Rural, Regional, Real Estate, and Transportation Economics / General Regional Economics / Regional Economic Activity: Growth, Development, Environmental Issues, and Changes; Q32: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Nonrenewable Resources and Conservation / Exhaustible Resources and Economic Development; O33: Economic Development, Innovation, Technological Change, and Growth / Innovation; Research and Development; Technological Change; Intellectual Property Rights / Technological Change: Choices and Consequences; Diffusion Processes; Q38: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Nonrenewable Resources and Conservation / Nonrenewable Resources and Conservation: Government Policy; O24: Economic Development, Innovation, Technological Change, and Growth / Development Planning and Policy / Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy; Q37: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Nonrenewable Resources and Conservation / Nonrenewable Resources and Conservation: Issues in International Trade
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