Marco Bellandi, Silvia Lombardi, Erica Santini (p)

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Maurício Aguiar Serra (p), Celio Hiratuka, Ana Paula Bastos

The period from 2000 to 2013 was mainly characterised by the rise in oil prices and the discovery of oil fields far off the coast of Rio de Janeiro, known as pre-salt, which was announced in 2006 and considered as one of the biggest finds of this century by the Lula administration at that time. Indeed, both factors led to an increase not only in oil production, but also in investments in upstream and downstream activities. The pre-salt represented a major boost in the oil and gas sector and also a challenge to Petrobras - the Brazilian giant oil state-owned. In order to operate efficiently in deep waters, Petrobras was forced to develop its own technology, work together with supplier companies, universities, researchers and technological centres, and hired drilling rigs, platforms, ships, and submarines, with financial resources that set the entire supply chain into motion. As a consequence, major suppliers decided to set up research centres in Brazil, which contributed to strengthening the sector’s competitiveness. However, since 2014 this positive context has dramatically changed with the steep drop in oil prices. In fact, Brazil's economy went through its worst recession in decades following a sharp fall in commodity prices together with the sluggish recovery of the world economy and the sharp deceleration in China's economy. To make this context worse, the President Dilma’s impeachment threw the country into turmoil and the Operation Car Wash - the name given by the Brazilian prosecutors to the investigation into the biggest corruption scandal in Brazil’s history - has severely affected Petrobras and, consequently, the entire supply chain. This new context is marked not only by changes in Petrobras’strategy, whose main target will be the pre-salt, but also by a greater degree of flexibility in the oil and gas sector, which will have a greater particiation of foreign offshore operators. Due to the economic and political crisis, Brazil is experiencing a transition phase in which the “old model”, inspired in Norway and based on the supplier chain development, has been abandoned in favour of a “new model”, whose main focus is on production and that has similarities to some countries, such as Indonesia, Mexico, Venezuela and Netherlands. This paper aims at analysing the impacts of this “new model” for the oil and gas sector on the supply chain in Brazil.

Mitsuhiko Kataoka (p)

There is a major public consensus that the mining sector benefits the economies in many ways. One of the most significant benefits is the development of many remote sub-national regions which otherwise may not have occurred to such an extent. Mining sites are in many cases the only significant employer in some of these remote areas. On the other hand, the enclave nature of mining industries plays an important role in affecting the heterogeneity of incomes across subnational regions.
Given Indonesia’s rich mining endowments that are scattered around the off-Java Islands, the mining industry contributed approximately 8% to the national Gross Domestic Product in 2010; however, the industry represents a much larger share of the regional economies of many provinces, including Papua, Central Sulawesi, Riau, West Nusa Tenggara and East Kalimantan.
We measure the casual factors to the interprovincial inequality in the labor productivity, incorporating efficiency factors, in Indonesia’s pre-and post-crisis period, by referring to Cheng and Li’s (2006) inequality decomposition technique. To incorporate efficiency factors into decomposition analysis, we utilize the data envelopment analysis.
Using the quinquennial observations of 26 contiguous provincial GDP and factor inputs (labor and physical capital) for 1990–2010, we found that the convergence in the per capita level of the sector-specific physical capital and technological progress, associated with lowering its labor productivity, contributed to the narrowing interregional productivity inequality in Indonesia’s mining sector throughout the observation period. This empirical finding suggests implementing more business-friendly policies.

Cheng, Y.-S. and S.-K. Li, 2006. Income inequality and efficiency: A decomposition approach and applications to China. Economics Letters, 91(1), pp. 8–14.