Global Value Chains in the Peruvian Mining Sector

Oct 2016
Traditionally the Peruvian context has been unfavorable for innovation by local firms in the mining sector. However, some firms have managed to innovate despite these conditions in recent years. The aim of this paper is to understand the factors and incentives that foster or hinder innovation in the Peruvian mining industry. Through the study of the experiences of a group of local suppliers, the mechanisms that lead to innovative activities are identified and analyzed. Special attention is paid to the role of interaction between contractors and large mining companies in the framework of Global Value Chains, as well as to the innovative efforts of some local suppliers. Evidence shows that innovation by local suppliers in the Peruvian mining sector has a limited scope and some particular characteristics. First, local suppliers who manage to innovate are mainly incumbent firms whose experience in the market allowed them to integrate into the mining value chain. Second, most of these firms are usually supported by their relationships with larger national or international companies. Third, the more important innovations seem to be concentrated in specific sectors where there is less foreign competition because of their specificity to the Peruvian context.