Maniefsto: Annabel Marin - Innovation In Natural Resource Based Industries In Latin1
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The STEPS Centre Symposium, 26 September 2009, focused on our Innovation, Sustainability, Development: A New Manifesto project. This presentation by Annabel Marin of SPRU was one of those given at the event. For more information see: www.anewmanifesto.org
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Maniefsto: Annabel Marin - Innovation In Natural Resource Based Industries In Latin1
- 1. Innovation in natural resource based industries in Latin America: the case of the agricultural sector in Argentina Anabel Marin SPRU
Editor's Notes
- I have been asked to talk about the re-distribution of global innovation aand what it matters for us more than anything else, its implications for these countries, particularly with respect to poverty alleviation. I think that it is more appropriate or interesting perhaps to talk about the emergence of new innovation capabilities in emerging economies, some of which are associated with the re-distribution of innovation, a process that in this language seem to be driven by large corporations, and in some cases is and in others not.
- I have chosen to talk about innovations in the agricultural sector in Argentina, one case of NR based industries in LA, For three reasons: Given the importance of NR for emerging economies Given the importance of the agricultural and agroindutrial activity for LAC Because this is a case of substantial transformations/ innovations in Latin America, which is posing numerous challenges of different types and some time co=nflicting to these countries, some of which are well addressed in the discussions here in STEP, but some of which are not so much, particularly if ones take into account the enourmous diversity of developing countries. . So would like to put all of these together, empfasising the ones that have been neglected in my view, and perhaps if the time allow me, to sign to some of the potential conflicts and trade offs we face.
- To discuss these questions I will concentrate in the case of Argentina which I know better During the 1970s and 1980s, in a macroeconomic scenario of high instability and depressed economic activity, and after years of unfavourable internal relative prices, the agricultural sector in Argentina performed poorly. It grew less than the rest of the economy, with the total volume of output in 1990 being little higher than it had been in the 1960s, and it was very slow in adopting the new technologies and organisational arrangements associated with the green revolution. However, in the 1990’s, in association with the openness and de-regulation of the economy, and with the increasing exposure of the Argentinean economy to international competitive pressures, the sector recovered its economic dynamism of previous periods.
- Experts in Argentina agree on the importance of three transofmrations. The most dramatic of them is the widespread and rapid diffusion of ZT technoloogies, which has allowed doble and times triple crop. However, the We can discuss whether or not this constitutes innovation, however this is not the point here.. Some people would argue that these transformations do not constitute innovations given that the ZT and the transgenic seeds have not been created in Argentina, however, this is a very narrow view of what is innovation. In the way we understand innovations here this includes the processes of diffusion and adoption/adaptation, and the organizational changes involved in this process. The transformations experienced by the agricultural sector in Argentina has included high amounts of diffusion/adoption and transformation of the technology for local purposes and also imortant components of organisational change, with the increased prominence of contratrists in the business and the development of complex networks involving landowners/contratists/input providers/public intuitions of S&T and agricultural technology, etc..; all of which together can explain the increase in productivity reached
- The more important thing for us here is what have been the implicaitons of these hugh transformation in the sector. Well some of the short term more obvious positive implications of these transofrmaitons, which are key for developing countries such as Argentina include …..
- Regarding the longer term positive implications, what we think is crucial is the impact of these transformations, on the development of capabilities to creat related activities, or diversify the econony, so we do not get stuck into the mere production and export of resources. In this respect we have some evidence that the tranfromatiojns in the agricultural sector have generated some dowmstream and upstream linkages… Just to give two examples, when we look at dowmstream linkages linked to the crop production the country has developed one of the more advanced in the world processing industries of oil and flowers, and is moving now to biofuels When we look at the linkages upstream, and more interestingly the transformaitons, espcially the diffusion of ZT, because is happened early in world and it needed very specific type of machineries adapted to local ecoological condiciotns, have encourasged the development of a sector of agricultural machinery which in certain sectors is supplying 90/100 of the domestic demands, is entirely supplied by domesitc SME companies, and has started to export and interniosaniles to the rest of the world. however, we are still far away from having a satisfactory situation there in terms of linkages, the processing industry it produces a commodity still considered of low added value (the value of one ton of agricultural exports from Argentina is 400 dollars, the average of Australia and New Zealand is 1000), and the processes of diversification toward other activities as in the case of agricultuiral machinery is still very weak and incipient
- So, if we put toghether these issues, with the very well know by this group here of sustainability (which I have not mentioned not because I do not consider important, but because I know that you know them very welkl) when we start to think about impact on poverty reduction, we realise that we face several important and sometimes conflicting risks. Jus to mention some of them: We run hugh enviromental risks, if the countri/countries, using these trajectories are not able to produce the necessary knowledge to attemper the effects of intensive agriculture, or the use of GM, some of which are unknown, or to explore alternative trajectories, for using the vast organic crop land that the country has, is second in the world) within this trajecotry we run the risk of being unable in the very near futire to access the knowledge necessary to continue using this trajectory if considerable investments in knowledge production are not made, given the concentration of knowledge in a few MNCs, which are already developing seeds/improvements, which address the problems that are important for the particular problems of the country. Monsanto is developing maize seeds in Brazil adapted to the diseases and ecological conditions in this country but not in Argentina. This is because they have had enourmous problems in the country to recover their fees for the use of their innovation, the soy RR, so Argentina has to decide what to do. In anycase is also estimated that there will be a lot improvements that MNCs will not do, so the country, if in this trajectory will have to carry out heavy investments to keep the current success And imprtantly when thinking about poverty reduction we run the risk of not haviong an impact on poverty if the innovations/transformations are not availbale for poor farmers, or are destroying employment in country side, but more importantly for countries such as Argentina and others in lAC which have most of the p0opulaiton in the cities, 90%, and therefore poverty in the cities, if the innovations/transformations/dynamism of thgese industries are not used to create capabilities to develop/encorage related activities, and diversify the economies, all of which will create employment in the cities, in adition to taxes, and will reduce poverty in a sustainable way.
- We should probably do both, taking into account the sustainability of the model in the future, but we should be aware here of the high investment efforts, and capabilities required, and also of the exitence of conflicing interests, which need to be handled, which in the context of developing countrie,s is not easy as Argenitna again is a very good example. It is interesting for instance the case of Brazil where they have two Ministries of Agriculture. One of them supports the competitive sector (called the Ministry of Agriculture, Livestock and Food Supply, the other created in 2000, run programmes targeted to family farmers and land reform/. Interestingly and reflecting the duality of these countries, in the Hong Kong Ministerial meeting of the WTO, the minister of Agrarian development openly defended the right of food sovereignty for developing countries by means of direct subsidies and additional border protection. In the same meeting the Brazilian minister of Agriculture was asking for substantial improvements in market access for both developed and developing countries.