Knowledge in Mining does matter. But not any Knowledge.

The Mining Sectors in Chile and Norway, ca. 1870 – 1940: the Development of a Knowledge Gap

By: Kristin Ranestad (University of Oslo)

Abstract: 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 analysis of how knowledge accumulation occurred and how it was transformed by learning into technological innovation in mining, a sector which has long traditions in Norway and has been by far the largest export sector in Chile for centuries. Similar types of ‘knowledge organisations’ with the direct aim of developing knowledge for mining were developed in both countries. Formal mining education, scientifically trained professionals, organisations for technology transfer and geological mapping and ore surveys are compared in the search for differences which may explain the underlying reasons for variations in economic growth.

URL: http://econpapers.repec.org/paper/heswpaper/0105.htm

Distributed by NEP-HIS on: 2016-11-13

Review by Miguel A. López-Morell (University of Murcia)

The effect of mining on the economic development of countries with abundant natural resources is a central issue of the history of economics. The question is straightforward: Why does mining have a positive effect on some countries while in others its contributions to the economic development are scant, not to mention the huge environmental problems that mineral extraction and processing generate? The “resource curse” myth does, unfortunately, hold true in most developing economies, but it is hard to take on board when we consider countries with very long mining traditions like Australia, the USA and Canada, to mention but three, and their high levels of income. There is, therefore, a need for studies that do not demonize the sector but rather search out deep causes and well-founded arguments to explain the conditions in which mining has a positive effect, or other, on development.

Rajos-Centinela

Mines in Antofagasta (Chile). Source: Tapia, Daniela. “Distrito Minero Centinela: La ambiciosa apuesta de Antofagasta Minerals.” Nueva Minería y Energía, November 17, 2014, link.

 

Kristin Ranestad approaches the issue from a comparative institutional perspective. The examples she uses, Chile and Norway, are in some ways congruent, in that both have a long mining tradition and they are not dependent countries with development problems; indeed, in terms of development per inhabitant, they are clear leaders in South America and Europe.

Ranestad identifies the similarities and differences in the levels of education of the mining engineers and technicians; the proportional presence of the latter in mining; the deployment of advanced information systems, such as scientific journals or attendance at congresses and exhibitions; the existence of study travels and work abroad; and the intensity of geological mapping and ore surveys.

The conclusions Ranestad draws leave little room for doubt. All the above facets that affect technological knowledge in modern mining are to be found in both countries, yet there are important differences in terms of quality and quantity, with Norway always coming out on top, except in terms of university education. Chile loses out as there is no direct relationship between the size of the mining sector and the level of development of other factors, where it trails Norway by some way.

The reasons, although not explained in depth here, lie to a large extent in the presence of large North American groups like Kennecot or Anaconda in Chile since the First World War. These controlled the huge deposits of Chuquicamata or El Teniente, where they introduced modern mining production technologies that boosted export capacity, although they always acted in isolation. At the same time, there was a large group of small and medium size Chilean mines that was working with minimum technology, almost non-existent externalities and a highly deficient exploitation of the deposits, which were frequently abandoned well before they had been fully exploited with the technology of the time. In contrast, Norway was streets ahead in all aspects and its mines were far more diversified and making far better use of their resources. They were also far more in tune with the economic environment.

The approach seems to be an interesting one since economic historians frequently, and mistakenly, argue in favor of the importance of quickly reaching historical landmarks that affect institutional and technological development, while overlooking the real significance of these for the production system. We tend to give an overwhelming importance to the age of technical schools, professional associations or scientific publications rather than to reflect more on how much influence they have had and how mature they are.

There may be some question marks hanging over Ranestad’s figures for the numbers of active engineers in each country. According to her reasoning and to the sources consulted, the argument stems from the idea that training was an endogenous affair since she draws on the mining schools’ own records to fix the figures of engineers. So we cannot, on the basis of the information provided, know what percentage of engineers had been trained abroad. In Spain, for example, which was a leading mining power at the time, there was a relatively high number of engineers who had studied abroad prior to the Second World War. Indeed, foreigners and Spaniards who had studied abroad accounted for some 250 mining engineers, according to one database constructed using the annuals of mining engineers, even though it did not include man professionals working in large companies in Spain, like Rio Tinto Co, Tharsis, la Asturiana or Peñarroya, which did not even bother to inform about such matters (see Bertilorenzi, Passaqui and Garçon 2016, pp. 143-162). The author herself, when talking about foreign engineers, notes: “However, their dominance was negative in the sense that the lack of collaboration with domestic engineers and leaders prevented knowledge transfer within the sector”. Yet she does not back this up with hard figures.

Nevertheless, her contribution is a valuable one which affords a novel approach that is perfectly applicable to other works of comparative economic history. In the case of Chile, there is no explanation of the differences to the sector following the nationalization of the copper industry between 1853 and 1971. In perspective, though, it is not comparable with the Norwegian situation in the sense of the sector’s capacity to transfer knowledge to other sectors and to the country as a whole. A prime example is Orkla, which is today a huge, widely diversified conglomerate that has little do to with mining, but which in the 1920s produced copper and pyrites more profitably than its competitors, despite its mineral being 10% poorer in quality. It would even sell technology to Rio Tinto, no less. It would also be worthwhile analyzing whether the nationalization of copper mining and the government control of oil in Norway have had similar repercussions for the inhabitants of each country. A starting point would be to ask Chilean pensioners whether they have similar benefits to their Norwegian counterparts, even though the answer does seem foregone.

References

Bertilorenzi, Marco; Passaqui, Jean-Philippe and Garçon, Anne-Françoise (dirs.) (2016) Entre technique et gestion, une histoire des « ingénieurs civils des mines » (XIXe-XXe siècles).París, Press des mines

Harvey, C. and Press, J. (1989) “Overseas Investment and the Professional Advance of British Metal Mining Engineers, 1851 – 1914”, Economic History Review 1989, 42 (1) pp. 64-86.

Mokyr, Joel (2002) The Gifts of Athena: Historical Origins of the Knowledge Economy. Princeton: Princeton University Press.

Rosenberg, Nathan (1982) Inside the Black Box: Technology and Economics. Cambridge: Cambridge University Press.

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One thought on “Knowledge in Mining does matter. But not any Knowledge.

  1. Kristin Ranestad

    I appreciate the review that is made by Miguel A. López-Morell very much. My points and arguments in the paper are summarized in the review in a very nice way.

    I have a couple of comments and clarifications to López-Morell’s review, which may be useful for the readers. López-Morell points out that the reasons for differences in knowledge development between Chile and Norway are not explained in depth. In this working paper, and in my thesis (which is found online: https://archive-ouverte.unige.ch/unige:80779) the analysis is mainly focused on showing how the two countries differ. The next step is to go deeper into the questions of why they were different. In the published paper, with the same title as this working title, I suggest some underlying factors explaining the differences in knowledge development. A key underlying factor, I argue, is the role of the state. In Chile, some public initiatives were implemented, but the state was much more active in supporting knowledge development in Norway. In Norway, the state funded the National Geological Survey, guaranteed general schooling, financed universities, mining and technical schools and managed many of the travel scholarship arrangements. The underlying reasons for downgrading mining in Chile were perhaps related to the agricultural elite, which dominated the political agenda. The oligarchic political elite in Chile seemed to be less interested in facilitating industrial development than the Norwegian government. Although there were political decision-makers who saw the importance of fostering mining in Chile, the great majority of the political sphere had other interests, which possibly was in direct conflict with mining. This issue is something that I would like to explore and compare further in future research. The revised and published paper is found here: http://www.tandfonline.com/eprint/Ndsa4TGhPG6MZhC4EENY/full.

    Another point I would like to clarify, which is related to the above argument, is related to the question of how many engineers were trained abroad. In my thesis, I discuss this issue on pages 277-279 and 303. On pages 450 and 457 you will find tables of mining engineer graduates from Chile and Norway and they include information about the number of engineers who studied and graduated abroad. This is a very important point, which I analyze in more detail in my thesis. The main argument is that many more mining engineers from Norway studied abroad than from Chile. This is related to a more general point, which is that a large share of engineers and technicians from Norway, and other Scandinavian countries, travelled abroad to network, study, work or to do practice at mining plants and research centers. I find that 256 of 341 Norwegian mining engineers who graduated between 1787 and 1940, seventy-five per cent, went abroad to 1) study at an educational establishment (34, 6 per cent of the graduates studied partly or only abroad), 2) do geological surveys or to acquire information about specific techniques, or to 3) do practice or work at a mining company in countries such as Germany, Sweden, England and the United States. This strong tradition, or trend, is not found in Chile.

    In another paper, I discuss the relevance and use of having practical experience from abroad in Chile and Norway in more detail. I analyze the employment of local workers by multinational companies and relate this to the practical qualifications of mining engineers. Practical experience with up-to-date technology, which was what multinationals normally used, was normally acquired abroad. The lack of hands-on experience with up-to-date equipment, furnaces, power stations and working techniques among Chilean mining engineers probably led to reduced work opportunities and may contribute to explain why there is no trace of any mining engineer working at the North American copper companies in this period (see article to be published in Business History: Ranestad, “Multinational mining companies, employment and knowledge transfer: Chile and Norway from ca. 1870 to 1940”: Manuscript ID FBSH-2016-0204.R2, forthcoming).

    Please let me know if you have any comments. My e-mail address is Kristin.ranestad@iakh.uio.no

    Reply

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