Managing FDI for Development in Resource-Rich States (eBook)

Dr Lou Anne Barclay is Senior Lecturer of International Business at the Mona School of Business and Management, The University of the West Indies, Jamaica. Her work has appeared in journals as diverse as Oxford Development Studies, European Journal of Development Studies, African Development Review and Social and Economic Studies. Lou Anne won The Principal's Research Award for The Most Outstanding Researcher in the Faculty of Social Sciences in 2006. This award, however, is not the first public recognition of her research abilities. Her work has been described 'setting new standards for research work on economics of developing nations' by the esteemed Professor Alan Rugman in his 2006 article entitled, 'Multinational enterprise strategy for developing countries'. She has participated in conferences at the Harvard Business School, United Nations Centre for Trade and Development and other leading institutes. Her research interests are related to firm, industry and country competitiveness in developing economies.

Cover 1
Half-Title 2
Title 4
Copyright 5
Contents 8
List of Figures 9
List of Tables 11
Foreword 13
References 16
Acknowledgements 17
Introduction: Resource-Seeking FDI: Birth, Decline and Resurgence 18
Resurgence in resource-seeking FDI and the rebirth of resource nationalism 19
The organisation of the book 21
Creating an institutional environment for resource-driven, FDI-facilitated development in small resource-rich developing countries: Lessons learnt 21
1: The Importance of Institutional Efficiency to Resource-Driven, FDI-Facilitated Development 24
Introduction 24
The resource-seeking multinational enterprise and economic development in resource-rich developing countries 26
The shifting focus from fiscal benefits to positive externalities 26
The resource-seeking multinational enterprise and stunted economic development: academic explanations 27
Linkage creation and resource-rich countries 28
The multinational enterprise and linkage creation in developing countries 30
The primacy of institutions in industrial policy making and implementation 32
Embedded autonomy and the industrial policy process 32
Embedded autonomy and bureaucratic efficiency 34
The importance of bifurcated bureaucracies to the industrial policy process 35
Bureaucratic challenges to the industrial policy process in the twenty-first century 36
2: Introducing the Resource-Rich Caribbean Countries 39
Introduction 39
The focus countries 40
Jamaica 42
Guyana 44
Suriname 46
Trinidad and Tobago 46
Resource-driven, FDI-facilitated development and the resource-rich CARICOM countries 49
3: The Aluminium Value Chain 50
Introduction 50
The value chain 50
The global aluminium value chain 51
Bauxite mining 53
The emergence of Asia as the dominant global bauxite mining region 53
The decline of the six oligopolistic, vertically integrated aluminium MNEs 54
Capabilities involved in bauxite mining 56
Alumina refining 59
The dominance of Asia in global alumina production 59
The synergistic relationship between bauxite production and alumina refining 60
Capabilities involved in alumina refining 61
Support activities of alumina refining 61
Aluminium smelting 63
The relocation of primary aluminium production centres away from traditional locations 63
The changing landscape of aluminium producers 65
Capabilities in aluminium smelting 65
Support activities of aluminium smelting 71
Aluminium fabrication 71
Downstream activities: a movement away from traditional markets 73
The independently owned small and medium-sized firm 73
Capabilities in aluminium fabrication 74
Conclusion 74
4: Upgrading in the Aluminium Value Chain and Resource-Driven, FDI-Facilitated Development 76
Introduction 76
Upgrading in the value chain 77
Upgrading in the value chain and FDI-facilitated development 77
Resource-driven, FDI-facilitated development and the aluminium value chain 79
Moving along the aluminium value chain 79
Within each stage of the aluminium value chain 79
The nature of the capabilities 80
Conclusion 87
5: The Changing Fortunes of a Strategic Industry: The Bauxite Industry of Jamaica 90
Introduction 90
The evolution of the bauxite industry in Jamaica 90
Creating an institutional capability for resource-driven, FDI-facilitated development in Jamaica 95
Creating bifurcated bureaucracies to manage Jamaica’s bauxite industry 96
Institutional efficiency and the Jamaican bauxite industry 98
Embedded autonomy and effective industrial policy in Jamaica 100
Embedded autonomy and the Jamaica Bauxite Institute 102
Embedded autonomy, institutional efficiency and FDI-facilitated development in the bauxite industry of Jamaica 103
Industrial upgrading in the Jamaican bauxite industry 104
The role of the Jamaica Bauxite Institute 104
Moving from low value-added to higher value-added activities in the aluminium value chain 104
Developing local supplier firms 104
Developing downstream industries 107
Increasing the skill content of activities in the aluminium value chain 108
Institutional development for capability building 108
Conclusion 113
6: Policy Fluctuations in the Resource Sector of a Small Developing Country: The Case of the Bauxite Industry of Guyana 116
Introduction 116
The return of the multinational enterprise to the bauxite industry of Guyana 116
The evolution of the bureaucracy in Guyana 122
Institutional efficiency and the bauxite industry of Guyana 124
The pre-nationalisation era 124
Creating bifurcated bureaucracies in the nationalisation era 125
Institutional efficiency and the performance of the bifurcated bureaucracies 126
The privatisation era 126
Institutional efficiency during the post-privatisation era 127
Embeddedness and industrial policy making in Guyana 127
Embeddedness and the institutions created to manage the bauxite industry 129
Embedded autonomy and FDI-facilitated development in the bauxite industry of Guyana 129
Industrial upgrading in the bauxite industry of Guyana 129
Moving from low value-added to higher value-added activities in the aluminium value chain 129
The development of local supplier firms 130
The development of downstream industries 131
Increasing the skill content of activities performed in the aluminium value chain 133
Institutional development for capability building 133
Developing technical and managerial capabilities 134
Developing local industrial research capabilities 136
Conclusion 138
7: Dependent Underdevelopment? The Aluminium MNEs and the Bauxite Industry of Suriname 140
Introduction 140
An unholy alliance: The aluminium multinational enterprises and a small bauxite-rich developing country 140
The institutional framework created for policy making in Suriname 144
Creating bifurcated bureaucracies for policy making in the bauxite industry 145
The Bauxite Institute of Suriname and policy making for the bauxite industry 147
Embeddedness and policy making in the bauxite industry of Suriname 148
Embedded autonomy and FDI-facilitated development in the bauxite industry of Suriname 150
Moving from low value-added to higher value-added activities in the aluminium value chain 150
Developing local supplier firms 150
Developing downstream industries 155
Increasing the skill content of activities performed in the aluminium value chain 156
Institutional development for capability building 156
Developing technological and managerial capabilities 156
Developing research and development capabilities 159
Conclusion 160
8 Addendum: Embedded Autonomy and the Industrial Policy Process in the Twenty-First Century: Developing an Aluminium Industry in Trinidad and Tobago 163
Embedded autonomy in the twenty-first century 163
Accountability, transparency and embedded autonomy 164
Developing an aluminium industry in Trinidad and Tobago 167
The institutional framework for industrial policy making for the natural gas-intensive industry 169
Embeddedness and the policy process in Trinidad and Tobago 171
Accountability and transparency in policy making for the aluminium industry 174
Embedded autonomy, accountability and transparency, and FDI-facilitated development in the proposed aluminium industry of Trinidad and Tobago 174
Moving from low value-added to higher value-added activities in the aluminium value chain 175
Developing local supplier firms 175
Fostering downstream industries 176
Increasing the skill content of activities in the aluminium value chain 177
Building technical and managerial capabilities 177
Developing research and development capabilities 178
Conclusion 180
9: Resource-Driven, FDI-Facilitated Development in CARICOM: Myth or Reality? 183
Introduction 183
Bifurcated bureaucracies in resource-rich CARICOM countries: Are they efficient? 183
The private sector in resource-rich CARICOM countries: Are they capable? 186
Embedded autonomy in resource-rich CARICOM countries – Does it exist? 191
Does embedded autonomy exists in the four resource-rich CARICOM countries? 194
Has resource-driven FDI-facilitated development occurred in the resource-rich CARICOM countries? 195
Moving from low value-added to higher value-added activities in the aluminium value chain 195
Developing secondary process activity 195
Establishing local supplier firms 196
Increasing the skill content of activities performed in the aluminium value chain 196
Developing technical and managerial capabilities 196
Developing industrial research capabilities 197
Developing export marketing facilities 197
Developing a dynamic technological capability 198
Conclusion 201
10: Conclusion 202
Introduction 202
Is embedded autonomy possible in the focus countries? 202
Is it possible for efficient bifurcated bureaucracies to exist in the focus countries? 203
Is it possible for the private sector in the focus countries to be capable and entrepreneurial? 205
Is embeddedness realistic for the focus countries? 208
Final comments 211
Appendix 212
Notes 225
1 The Importance of Institutional Efficiency to Resource-Driven, FDI-Facilitated Development 225
3 The Aluminium Value Chain 226
4 Upgrading in the Aluminium Value Chain and Resource-Driven, FDI-Facilitated Development 228
5 The Changing Fortunes of a Strategic Industry: The Bauxite Industry of Jamaica 229
6 Policy Fluctuations in the Resource Sector of a Small Developing Country: The Case of the Bauxite Industry of Guyana 231
7 Dependent Underdevelopment? The Aluminium MNEs and the Bauxite Industry of Suriname 234
8 Embedded Autonomy and the Industrial Policy Process in the Twenty-First Century: Developing an Aluminium Industry in Trinidad and Tobago 237
9 Resource-Driven, FDI-Facilitated development in CARICOM: Myth or Reality? 240
10 Conclusion 241
Bibliography 244
Index 262