Inequality and regional development in resource economies of advanced capitalist economies

Abstract

Regional development theories draw on forces of economic convergence or divergence to explain uneven core-periphery spatial processes of community formation. But there continues to be limited understanding of how different capitalism types shape this, such as in resource economies in advanced capitalist economies where global competitiveness depends on the productivity increases of technological innovation and a specialized flexible workforce. This paper unpacks contemporary understandings of regional development processes, arguing that theories often underestimate the scale of labor commuting, as well as the level to which it is structurally transforming resource economies. It draws on evidence from Western Australia, examining how resource production has shaped the spatiality of economic activities between the Perth metropolitan region and its peripheries. Outlining factor inputs of two broad resource economy types, it offers four dimensions influencing spatial relations of resource economies in advanced capitalist nations which need deeper consideration in regional development models. It concludes that understanding the unique processes driving spatial (dis)advantage within such economies is critical to efficient policy formation, and that not doing so may unwittingly exacerbate spatial inequality.

Gateways or backdoors to development? Filtering mechanisms and territorial embeddedness in the Chilean copper GPN’s urban system

“…These last figures are strongly related to the fly–in fly–out system of work (FIFO) in the extractive industry, which suggests a disarticulated regional economy (Martinus, 2016, 2018; Stilwell, 1991). As MacKinnon (2013) explains, the FIFO reflects a second form of economic leakage: the first one being the profits captured by the mining firms, and the second caused by the “fly over” effect of long‐distance commuting, where value is significantly captured in the regions where workers live.…”

“…Research on the extractive industries and economic development has revolved around the simplification of countries rich in natural resources either being “cursed” (Auty, 1994; Badeeb et al., 2017; Humphreys et al., 2007; Rosser, 2006; Sachs & Warner, 2001) or “blessed” (Gunton, 2003; Javorcik, 2004; Li & Liu, 2005). Economic geography contributions have converged to finesse this story, focusing on the degree to which extractive territories are able to sustain value capture, diversify its productive tissue and reach sustainable territorial development through their insertion into global markets and networks (Martinus, 2018; Phelps et al, 2015, 2018). To territorialise that discussion, the GPN framework provides a way to explore uneven development patterns associated with the nexuses of firms, states, and civil society comprising the “interconnected functions and operations through which goods and services are produced, distributed and consumed” (Henderson et al., 2002, p. 445).…”

“…However, mining territories do not seem to be participating in the potential gains of the increasing the depth of extractive GPN. Knowledge‐intensive activities are predominantly concentrated in the main urban agglomerations, while extractive areas are usually specialised in routine and ancillary tasks (Atienza et al., 2018; Martinus, 2018). Furthermore, there is an increasing the centralisation of corporate activities of mining companies, reducing the role of mine sites as a mere source of raw materials (Parker and Cox (2018).…”

“…Furthermore, there is an increasing the centralisation of corporate activities of mining companies, reducing the role of mine sites as a mere source of raw materials (Parker and Cox (2018). While these trends of fragmentation of production are common to most industries, in the extractive industries the increasing use of long‐distance commuting due to changes in transport technology and the regulation of shift work systems has led fly‐in fly‐out (FIFO) to become another of the main mechanisms to transform resource peripheries into little more than resource banks (Barton et al., 2008; Martinus, 2017, 2018).…”

“…After an exceptionally long period of high mineral prices, the so‐called “mining prices supercycle” between 2003 and 2013 (Humphreys, 2015), resource peripheries have not been able to obtain the benefits expected from their integration in global markets. In contrast, many works show a trend of concentration of the strategic assets related to the mining industry in the main urban agglomerations and a reduction in production linkages in mining territories (Atienza et al., 2018; Fleming et al, 2015); furthermore, there has been increasing use of long‐distance commuting (FIFO of workers), growing outsourcing of tasks, centralisation of corporate activities, and the (neo)liberalisation of foreign direct investment (FDI) policies (Atienza et al, 2018; Martinus, 2016, 2017, 2018; Parker & Cox, 2018; Phelps et al., 2015). These latter dynamics stem from a host of effects of the urban concentration of key corporate functions (Massey, 1984; Westaway, 1974), intra‐corporate, parent‐subsidiary and subsidiary‐host environment relationships (Phelps & Fuller, 2000, 2016) and product life cycle‐related possibilities for the decentralisation of production (Erickson, 1976; Howells, 1983).…”