Tuesday, 15 November 2016

The mining sectors in Chile and Norway, ca. 1870-1940: the development of a knowledge gap

Kristin Ranestad is a post-doc at
University of Olso

New EHES working paper

Chile and Norway are two ‘natural resource intensive economies’, which have had different development trajectories, yet are closely similar in industrial structure and geophysical conditions. 

The questions of how and why Chile and Norway have developed so differently are explored through an in-depth comparative analysis of knowledge accumulation in one of the natural resource sectors, namely mining, from around 1870 to 1940, a period in which mining went through important technological changes and the two countries started to diverge.

Countries rich in natural resources which exhibit poor economic performance, are often understood as being ‘cursed’ and recommended to shift to industries which are not based on raw materials. A key empirical problem with the ‘resource curse’ argument, however, is that some of the richest countries in the world, such as Norway, Sweden, Canada and Australia, have developed fast-growing economies based on natural resources. Differences in economic performance across natural resource intensive economies suggests that an abundance of natural resources does not necessarily lead to stagnation. Conversely, some countries have arguably developed because of their natural resources, not despite them. Evidence suggests that natural resource intensive industries in high-income economies have been highly knowledge intensive, dynamic and innovative, they have created linkages to other industries within the economy, and developed specialisations and new industries which have contributed to complex economic structures (see e.g. Andersen 2012; De Ferranti et al. 2002; Hirsch-Kreinsen et al. 2003; Ville and Wicken 2012). In this paper, I seek to contribute to this debate by systematically comparing how knowledge accumulation occurred in one sector, namely mining. Comparing one natural resource sector allows for much more in-depth empirical analyses than on a country level and allows us to explore how natural resource industries in some countries have become highly innovative, while others have not. 

A gap started to emerge between the two mining sectors from the late nineteenth century. While the mining sector in Chile was considered technologically advanced in the mid-nineteenth century, from the late nineteenth century, Chile’s share of copper production fell dramatically, multinational created ‘enclaves’, a technological gap emerged within the sector between technologically advanced multinational companies and small-scale companies using old technology, thousands of mines were abandoned and many of ore deposits remained unexploited. The mining sector in Norway, on the other hand, was innovative, multinational companies were more integrated in the host economy and production of large-scale electro-metallurgical production started in the late nineteenth century. 
“Boletin Minero”: The mining bulletin  included articles 
about mining companies, mining production, 
new technology, debates about the mining education etc.

Why did this gap between the two mining sectors develop? I explore how comparable knowledge organisations in the two countries; formal mining education, organisations for technology transfer and geological research centres, developed technological knowledge, and how such organisations encouraged or blocked innovation for the sectors.

I use primary sources from archives in Chile, Norway and the United States in the form of written documents. Study programs and course descriptions for both countries make it possible to compare the mining instruction on higher and intermediate level in detail. Graduate lists enable comparisons of the availability of mining engineers and technicians in the sector. Student yearbooks provide unique information about all the mining engineers, technicians, and other skilled workers with expertise which was relevant for mining. The books provide information about the work, positions and travels of the graduates.  These sources, together with engineering and company reports and technical and mining journals, allow us to follow the graduates from school and into their working life, and they enable us to make in-depth comparisons of the relationship between knowledge development, education, learning and innovation (See Ranestad 2016 for an explanation of these sources).

The detailed comparison of these knowledge organisations shows that there were differences between Chile and Norway in terms of knowledge accumulation. The set of organisations in Chile blocked transfer, use and diffusion of knowledge, while in Norway the organisations facilitated the creation, transfer and adoption of knowledge, which in turn contributed to an overall dynamic and innovative mining sector. This led to a knowledge gap between the two countries. 

“Ingeniørene” : An example of the student yearbooks which
include  detailed information about the
career paths of the engineers.

The formal mining instructions in the two countries were similar, but two countries differed when it came to the availability of mining engineers, technicians and other relevant skilled workers to administrate mining companies and manage complex technology. In particular, Chile had too few formally trained workers to fill the managing and strategic technical positions at the thousands of mining companies, technical schools and research centres. Additionally, the two countries differed when it came to scholarships and funds for practical learning. During trips abroad engineers and technicians acquired valuable contacts, information of new techniques, and most importantly they acquired practical know-how with foreign technology. While continuous public and private programs were established in Norway, and most of the mining engineers went abroad to learn, scholarships were only provided sporadically in Chile, and only very few engineers went abroad. These differences in knowledge accumulation between the two countries, I argue, contributes to explain the diverging paths of the two sectors. 

The two countries also differed when it came to geological mapping, prospecting, analyses of ore and economic planning. Without a deep understanding of the geology and about the existing mineral deposits and their potential profits, new mining projects could hardly take place and the mining sector could barely advance (David and Wright 1997). In Norway, The Geological Survey of Norway, a public organisation, was established in 1858 and had in principle two main tasks. On one hand, it was to contribute to new knowledge about geological features, their scope and potential utility. On the other hand, it sought to contribute to new and more systematic surveys of the country’s geological formations and deposits (Børresen and Wale 2008). In Chile, a permanent organisation with the aim of systematically map the country’s resources, did not exist. Sporadic geological work was carried out (Villalobos 1990), but it was not nearly enough to acquire complete and in-depth knowledge of existing ore deposits, their grade and possible profits. Therefore, the several thousand mines that were abandoned and unexploited mineral deposits remained unknown. This situation endured and large mineral deposits were not found up until recent time (De Ferranti et al 2002, 58-59). In short, the lack of geological maps and ore surveys in Chile had huge implications for the progress of the mining sector by blocking the start-up of mining projects. This, in turn, was linked to the small number of mining engineers and geologists in the country, who were indispensable for this type of work. These differences in knowledge accumulation contribute to explain the emerging development gap of the two sectors.  

The underlying reason for the knowledge gap may be linked to the role of the state. In Chile, members of the National Mining Society, professors and engineers expressed the need for more geological surveys, more skilled workers and more initiatives to send engineers abroad to learn. However, although some public initiatives were implemented, they were clearly not enough to encourage continuous innovation processes in the sector. It is, perhaps, strange that not more was done in Chile to develop knowledge for mining and to learn about the existing mineral and metal deposits, considering that this was a country with huge mineral and metal ores and some of the largest copper deposits in the world. Despite this huge natural resource potential, mapping the country’s natural resources, education and knowledge transfer were simply given lower priority by the broader set of political decision-makers. In Norway, in contrast, the state was much more active in supporting knowledge development as it funded the National Geological Survey, guaranteed general schooling, financed universities, mining and technical schools and managed many of the scholarships for study travels. 

Finally, I would like to commemorate Karl Gunnar Persson, who was a kind, joyful and caring person. He was a great support to Paul and very understanding. I met him several times with Paul for dinner and drinks and we heard cheerful stories about his travels, life experiences and research. I miss him and those very nice and interesting conversations.

This blog post was written by Kristin Ranestad, University of Olso
The EHES working paper can be downloaded here: http://www.ehes.org/EHES_105.pdf

Andersen, Allan Dahl. 2012. “Towards a new approach to natural resources and development: the role of learning, 
innovation and linkage dynamics”. Int. J. Technological Learning, Innovation and Development, vol. 5 (3).

Børresen, Anne Kristine, and Astrid Wale. 2008. Kartleggerne. Trondheim: Tapir akademisk forlag.

David, Paul, and Gavin Wright. 1997. “Increasing Returns and the Genesis of American Resource Abundance”. Industrial and Corporate Change, vol. 6 (2).

De Ferranti, David, Guillermo E. Perry, Daniel Lederman, and William E. Maloney. 2002. From Natural Resources to the Knowledge Economy. Washington D. C: The World Bank.

Hirsch-Kreinsen, Hartmut, David Jacobsen, Steffan Laestadius, and Keith Smith. 2003. “Low-Tech Industries and the Knowledge Economy: State of the Art and Research Challenges”. PILOT Policy and Innovation in Low-Tech. Oslo: STEP – Centre for Innovation Research.

Ranestad, Kristin. 2015. ”The mining sectors in Chile and Norway from approximately 1870 to 1940: the development of a knowledge gap.” PhD diss., University of Geneva.

Villalobos, S. et al. (1990): Historia de la ingenieria en Chile. Santiago: Editorial Universitaria.

Ville, S., & Wicken, O. (2013). “The dynamics of resource-based economic development: Evidence from Australia and Norway”. Industrial and Corporate Change, 22 (5).

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