half of total exports. Peru ranks second in the world in the production of silver and tin, fourth
in zinc and lead and eighth in gold and its mineral sectors enjoy prospects for further growth.
Another leader in this region is Brazil. Argentina seems to be moving ahead as well.
2.2. Historical evidence: natural resources, evolution of property rights and innovation
Successful resource-based development does not primarily depend on geological endowment.
The US developed its mineral potential ahead of other countries and continents, including
Latin America. The positive experiences of the US with its mineral abundance from the mid-
nineteenth to the mid-twentieth century explain much of subsequent economic growth
(Habbakuk, 1962; David and Wright, 1997). It was a choice driven by collective learning and
leading education in mining engineering and metallurgy, geological knowledge,
transportation, increasing returns and an accommodating legal environment where the US
government claimed no ultimate title to the nation’s minerals (Wright and Czelusta, 2002,
2003, 2004). The main lesson is that one has to learn to make the most of one’s resources (cf.,
Stijns, 2005). The role of private extraction and mining companies was crucial in this learning
process. The US was the world’s leading mineral economy in the very period that the country
became the world leader in manufacturing. Linkages and complementarities of the non-
resource sectors of the economy to the private resource sectors were vital to the American
economic success. Governments provided weak oversight. High wages may have contributed
to returns being dispersed throughout the US economy.
In 1913 the US was the world’s dominant producer of virtually every major industrial
mineral even though other countries initially seemed to have more mineral reserves. New
deposits were continuously discovered. The US share of world mineral production in 1913
was far in excess of its share of world reserves; mineral rich countries like Brazil, Chile,
Russia, Canada and Australia did much worse in developing new reserves and cheaper
techniques (Davis and Wright, 1997). The US experience suggests that impending scarcity of
natural resources can be compensated by technical progress in exploration, extraction and
substitution and privatization of reserves. Many resource rich economies may have performed
badly, not because they relied too much on resources, but because they failed in developing
their mineral potential through appropriate policies. Investment in minerals-related knowledge
seems a legitimate component of a forward-looking development programme.
Coal and iron ore deposits spurred industrial development of Germany and the UK
during the late nineteenth century. South Korea and Japan have taken advantage of fallen
transport costs and became important steel producers despite relying on import of iron ore.
Still, history shows that good experiences of resource rich economies are not always
replicated. In the seventeenth century resource poor Netherlands outpaced Spain, even though
the latter obtained much gold and silver from its colonies in the New World. More recently,