Assessing the Potential to Create Increased Economic Links
At a Glance
- Policies to promote horizontal linkages should be based on an assessment of the skills and technology developed for the mining and/or oil and gas sector.
- This involves assessing the depth of backward and forward linkages; assessing nonextractive economic sectors that could benefit; and understanding which capabilities and assets could be most easily transferred to other sectors.
- Chile Horizontal Linkages: Using Taxation to Foster Horizontal Linkages (Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development)
- South Africa Horizontal Linkages - Building Expertise by Overcoming Country-Specific Constraints (Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development)
This resource provides extensive guidance on the implementation of local content policies in the mining sector. For those interested in ...
This resource provides a concise summary of Chile’s experience developing horizontal linkages in the mining sector. Chile’s ...
This resource provides a concise summary of South Africa’s experience developing horizontal linkages in the mining sector. A unique ...
Policies to promote horizontal linkages need to start with an assessment of the current capabilities of extractive industries and their value chains. As Hausmann put it: “The probability that a country will develop the capability to be good at producing one good is related to its installed capability in the production of other similar, or nearby, goods for which the currently existing productive capabilities can be easily adapted.”
Assessing current capabilities involves looking at both skills and technology. Policy makers then need to consider how these existing capabilities may be best used to support other economic sectors, beyond mining and oil and gas. Key steps include:
- Assessing the depth of backward and forward linkages (which involve supplying the extractive industries and processing their outputs, respectively)
- Assessing non-extractive economic sectors that could benefit from current and adapted capabilities
- Understanding which skills can be most easily transferred from extractive industry activity
Each of these will be considered in the subtopics that follow.