Local content policies in mineral-rich countries: An overview

There is pressure from resource-rich countries’ population to derive more benefits from resource endowment, both on countries and companies. To address this, increasingly, resource-rich countries are searching for durable solutions to ‘disenclave’ their mineral sector, notably by developing and deepening economic linkages between the extractives sector and the rest of the economy. In this regard, an increasing number of countries introduced or reinforced local content policies (LCPs) with a view to stimulate the use of local factors of production, such as labour, capital, supplies of goods and services, to create value in the domestic economy and hence expand the industrial sector. This paper defines the contours of the local content debate and illustrates the key highlights of what are the relevant issues regarding LCPs. It also highlights the conditions that are necessary to support LCPs and examines the types of interventions by governments, industries and local communities. Finally, the paper concludes by looking at the various ways of scaling up impact.