Incorporation of Services into Natural Resource-Intensive Goods: description and measurament of the phenomenon

Abstract

South American countries play a key role in international markets of the so called Natural Resource Intensive Goods (NRIGs), in particular mining and food. It has been argued that this specialization pattern has disadvantages in terms of economic development, and both policy makers and academia repeatedly sustain the need to search for new international insertion schemes. In this paper we argue that one such avenue could be based on these comparative advantages themselves, and we ask how services can add value to the production and exports of NRIGs. To measure the relevance of economic infrastructure services on the competitiveness of NRIGs we develop a sectoral approach using domestic input-output tables for six Latin American countries. In particular, we measure Services value added incorporated in NRIGs, and we also analyse the impacts of productivity changes in infrastructure services on NRIGs producer prices. Results allow to identify which services are more important to each NRIG in each country. They also highlight that new instruments in trade and industrial policy must be develop to promote the specialized products services in NRIG. It is necessary to know the nature of the process that generates this new comparative advantage.

South American countries play a key role in international markets of the so called Natural Resource Intensive Goods (NRIGs), in particular mining and food. It has been argued that this specialization pattern has disadvantages in terms of economic development, and both policy makers and academia repeatedly sustain the need to search for new international insertion schemes. In this paper we argue that one such avenue could be based on these comparative advantages themselves, and we ask how services can add value to the production and exports of NRIGs. To measure the relevance of economic infrastructure services on the competitiveness of NRIGs we develop a sectoral approach using domestic input-output tables for six Latin American countries. In particular, we measure Services value added incorporated in NRIGs, and we also analyse the impacts of productivity changes in infrastructure services on NRIGs producer prices. Results allow to identify which services are more important to each NRIG in each country. They also highlight that new instruments in trade and industrial policy must be develop to promote the specialized products services in NRIG. It is necessary to know the nature of the process that generates this new comparative advantage.