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Dependency, Rent, and the Failure of Neo-Extractivism

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Dependent Capitalisms in Contemporary Latin America and Europe

Abstract

The chapter analyzes the development expectations and the rise, as well as failure and demise, of neo-extractivism in South America since the beginning of the 2000s. In particular, we focus on the structural background as well as on the underlying preconditions of the neo-extractivist development model. The chapter adds another aspect to the ongoing discussion on dependency and neo-extractivism that has hardly been considered so far: the prevalence and relevance of rent. Following the concept introduced in the introduction of this volume, we identify a particular mechanism of dependency in the effects of economic rents, understood as a specific form of economic surplus emerging from monopolies, ownership, market restrictions, and the concentration of political power. Rents are an internal as well as external mechanism of dependency, and societies that essentially depend on rent for their social reproduction face serious challenges in approaching diversification and abandoning their rent-based economic sectors, and thereby freeing themselves of dependency. For the dependency research program it must therefore be said in the future: bring rent in.

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Notes

  1. 1.

    In Spanish: Comisión Económica para América Latina y el Caribe (CEPAL).

  2. 2.

    A rentier economy is defined as an economy in which the dominant form of economic surplus is rent. A rentier state is understood as a political regime in which the state organizes its own exclusive access to rents, and consequently has the sole right to appropriate and distribute rent (Beblawi & Luciani, 1987).

  3. 3.

    Conceptually, we distinguish the sources of rent from the modes of rent appropriation (Warnecke-Berger, 2018: 36–40). The source of rent is the material basis (e.g. oil, copper, bauxite, coal in the case of mineral products; land and agricultural plants in the case of agrarian production) and the technical basis on which rent arises, e.g. ground rent, differential rent (Marx, 1972 [1894]: 653–697), neoclassical consumer and producer rent, and innovation rent (Khan, 2000 for an overview). The mode of rent appropriation describes the social and political access to rent and therefore its realization in physical, material and monetary terms.

  4. 4.

    https://unctadstat.unctad.org/EN/.

  5. 5.

    It should be noted, however, that identifying both the share of government taxes and royalties on rent in order to estimate state-led strategies for appropriating rent, as well as the weight of government revenues from natural resources as a share of total government revenues in order to accentuate the weight of rent within state institutions, remains a difficult task. Our calculation therefore uses several proxies. A first calculation accentuates the absolute tax revenue of Latin American governments. Government revenue as well as tax revenue increased in almost every Latin American country; this trend began particularly notably in early 2000. Furthermore, government revenue from non-renewable resources increased impressively, at least until 2014. In those countries that export minerals or fossils (with the exception of Chile), the share of revenue from natural resources as a share of total government revenue hovers around 80% (own elaboration from CEPAL, 2020).

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Burchardt, HJ., Dietz, K., Warnecke-Berger, H. (2021). Dependency, Rent, and the Failure of Neo-Extractivism. In: Madariaga, A., Palestini, S. (eds) Dependent Capitalisms in Contemporary Latin America and Europe. International Political Economy Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-71315-7_9

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