Natural gas revenues, subnational politics, and agrarian change in Peru and Bolivia. (September 2022)

• Record Type: Journal Article
• Authors: Irarrazaval, Felipe; Viale, Claudia
• Is Part Of: Extractive industries and society. Volume 11(2022)
• Publication Date: 2022-09
• Subjects: Resource rents -- Agrarian change -- Extractive industries -- Subnational political economy; Mineral industries -- Periodicals; Gas industry -- Periodicals; Petroleum industry and trade -- Periodicals; 338.205
• DOI: 10.1016/j.exis.2022.101093
• Languages: English
• ISSNs: 2214-790X

Abstract

Highlights: Research about economic diversification at the subnational level has not examined the place specific conditions that configure how resource rents impact other economic sectors at the subnational level. Subnational governments of Tarija in Bolivia and La Convencion in Peru largely invest resource rents in infrastructure. The preference for investment in infrastructure is grounded on the strategy of local authorities to provide an image of progress and development, trickle-down resources to the local population through the construction sector, and undertake corruptive practices. The effects of construction booms at the subnational level over the agrarian sector differ depending on how peasant organizations interact with local government and pursue direct transfers. It is necessary to examine the place specific conditions that define the effects of resource rents in other economic sectors at the subnational level to identify the specific drivers that underpin the different developmental outcomes. Abstract: The literature about natural resources and development has largely described states' failure to translate large resource endowments into sustainable development. Consequently, terms like resource curse or Dutch disease have become widely accepted. However, the literature examining this process at the subnational level has been less conclusive regarding the local effects, such as economic diversification. It is therefore pertinent to examine the contextual conditions underpinning both the expenditure of resource rents at the subnational level and the effects of such expenditures on economic diversification, particularly on the agrarian sector. To do so, this contribution deploys a comparative analysis between the Tarija department in Bolivia and La Convencion province in Peru. Both are hydrocarbon-rich areas in which subnational governments received massive amounts of resource rents. A deep examination based on qualitative and quantitative data permits the affirmation that whereas similar place-specific conditions boosted a massive investment of resource rents into public infrastructure, the composition of the agrarian sector defined a different trajectory in each case. While the strong peasant organization of Tarija obtained a direct transfer of resource rents, the transfer of those rents to the peasants in La Convencion was only through wages conditioned to work in the construction sector. As such, resource rents undermined the agrarian sector in La Convencion, while in Tarija the sector remained stable and potentially stronger in the long run.