Designing Local Content Policies in Mineral-Rich Countries
Many resource-rich countries have not succeeded in sufficiently using their mining sector as a stepping stone for broader economic transformation.
As a result, although the industry is a significant revenue contributor, its linkages with the rest of the economy remain rather weak. To address this, and under mounting pressure to deliver more inclusive outcomes, governments are increasingly taking regulatory measures with the objective to increase the use of domestic factors of production in the mining sectors, and provide more prospects for the local economy to benefit from the mining industry. Local content policies are one such strategy.
This document is meant to provide some clarity on the key characteristics and challenges of local content policies. It does not attempt to propose one definition of local content. It is meant to provide a better understanding of the various types of instruments used, as currently contained in existing legal and institutional frameworks and based on country specific experiences. The purpose is to highlight the prerequisites necessary to inform a decision whether or not to design local content policies, and guide readers to what types of policies could best be adopted, given the specific policy environment in place in their respective countries.