This is an archived version of the PW Sources newsletter from Saturday, May 6. Sign up to receive PW Sources directly to your inbox here.

LITHIUM

Last month, the Chilean government announced plans to nationalize the country’s lithium industry, which is dominated by two companies, Sociedad Química y Minera (SQM) and Albemarle. 

SEBASTIAN CARRASCO and ALDO MADARIAGA highlight the Chilean state’s failure to enforce regulations on these companies. 

From their article:

“Even if one believes in the capacity of the state to modernize the lithium industry and green the mining sector, it is not clear that the Chilean state is able to make private companies comply with its new policies and regulations. By openly bypassing existing regulations, firms have long mocked the state’s regulatory efforts, showing that the state significantly lacks the capacities that could make it a truly developmental leader in the country’s—and the world’s—green transition. In 2013, the state promotion agency in charge of enforcing lithium exploitation contracts, CORFO, started an audit of SQM after evidence came to light that it was illegally altering information on company earnings to reduce its royalty and rent transfers to the state. According to the audit, SQM failed to pay the state at least $17 million between 2009 and 2013 . . . The Bachelet government added a clause to its contract with Albemarle stipulating that up to 25 percent of new lithium production had to be sold at a preferential price to companies investing in value-added production in Chile. In 2018, Albemarle unilaterally chose not to comply with the government requirement.” 

+  “In Chile, the recent history of lithium has been full of conflicts and complaints of various causes, such as fraud to the treasury, environmental damage, anti-union practices, breach of contracts with CORFO, and illegal brine export.” By Bárbara Jerez, Ingrid Garcés, and Robinson Torres. Link. 

+  Felix Malte Dorn and Hans Gundermann on conflict between Indigenous communities in the Atacama Desert, lithium mining companies, and the Chilean state. Link. 

+  “The extractivist structures put in place during the Pinochet years continue to influence lithium supply chains in Chile.” By Donald V. Kingsbury. Link. And Oliver Hails on international regulation of lithium mining. Link. 

NEW RESEARCHERS

Industrialization

MARINA MAVUNGU NGOMA is a PhD student in economics and public policy at Tufts University. In her job market paper, she examines how Chinese imports affect manufacturing employment in Ethiopia. 

From the abstract: 

“The rise of China in the global economy has been linked with negative impacts on employment across many high and middle-income countries. However, evidence for African countries is limited. This paper investigates the causal relationship between Chinese imports and manufacturing employment in Ethiopia. Imports may harm domestic firms through a revenue effect (lower market shares) or benefit them, either indirectly if competition spurs innovation or directly through access to better quality or cheaper inputs. I find that a 1 unit increase in import penetration leads to a 15.2 percent increase in industry employment. I disentangle the inputs effect from the other two effects by decomposing total Chinese imports by their end-use category using input-output tables and find evidence that imported intermediate inputs are driving the employment gains. I find evidence consistent with the idea that employment gains are a result of productivity gains and increases in capacity utilization. These employment gains appear to disproportionately benefit large firms and labor-intensive industries.”

+ + +

+  “Jake Sullivan’s phrase ‘high fence, small yard’ evokes surgical precision, but Asian supply chains and economies are so interconnected that bans and ensuing retaliations will be far messier than it looks from Washington.” From the latest Polycrisis newsletter on the Cold Peace in Asia. Link. 

+  Germán Feierherd, Patricio Larroulet, Wei Long, and Nora Lustig on the Pink Tide and income inequality. Link

+  “The Republican attorneys general trying to stop student debt cancellation for 43 million borrowers have at no point been obliged to verify the basic facts of this case.” By Thomas Gokey, Eleni Schirmer, Braxton Brewington, and Louise Seamster. Link. 

+  Tim Barker on the lineages of political capitalism. Link. 

+  “In general, Nordic and Continental European welfare states with strong upstream systems and minimum income support (MIS) show better outcomes in core socio-economic outcomes such as poverty and exclusion risks.” By Werner Eichhorst, Holger Bonin, Annabelle Krause-Pilatus, Paul Marx, Mathias Dolls, and Max Lay. Link.

+  Nelson Oppong on mining and job creation in Africa. Link.

+  “Research consistently shows that hospital consolidation results in worse outcomes for patients.” By Sara Sirota. Link.

+  “What is most interesting about the new regulatory review proposals is that they appear as but one piece of a much wider set of governance reform efforts that the Biden Administration has set in motion.” By K. Sabeel Rahman. Link.

+  Dalia Marin on the threats facing Germany’s automobile sector. Link.

+  “Before hops were used, breweries were subjected to a so-called ‘Grutrecht’ or ‘flavoring license’ in many regions. This Grutrecht was named after the ‘grut’, a
combination of herbs that were used to flavor beer (or to ‘disguise faults’ in the brew) and to preserve the beer. The ‘Grutrecht’ was determined by the local authorities and was used to tax breweries. All brewers were obliged to buy grut for their brews from the local rulers and brewing beer without grut was forbidden. To avoid tax evasion, the exact composition of grut was kept a secret. While the addition of hops improved the taste and preservation of the beer and allowed for transportation over longer distances, hops threatened the Grutrecht. By using hops, brewers no longer needed grut (or less of it). Hence, the innovation of hops threatened local rulers’ revenue from the Grutrecht tax on beer. Therefore, in many regions, including Britain and Holland, the use of hops was prohibited for a long time. In fact, it took several centuries before the use of hops became commonplace in some European regions. Only after the Hundred Years’ War between France and England (1337–1453), one was allowed to use hops inbrewing English ales.” By Eline Poelmans and Johan F.M. Swinnen. Link. 

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org