Governments leverage natural resources in transition to hybrid economy
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Governments leverage natural resources in transition to hybrid economy
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hybrid resource- and knowledgebased economy has recently evolved as nations rich in natural resources attempt to increase the value of their exports by developing new high-tech industries and products locally, known as in country. This hybrid economy depends both on natural resources and on knowledge resources— namely ideas, information, and expertise. The shift away from exporting raw natural resources toward high-tech products is driven by government strategies that can take many forms. For example, different countries have enacted research funding, taxation, investment incentives, and trade regulations. The success of these hybrid economies depends heavily on the methods of implementation, the balance of government and industrial leadership and support received, and the strength of the targeted market. China and South Africa provide interesting examples of two governments that have employed different strategies to promote a transition to this hybrid economy. China has dominated rare-earth production for nearly two decades and although other sources are beginning to develop, China supplied over 85% of the world’s rare earths in 2012. The Chinese government has begun to consolidate its rare-earth industry and has implemented regulations aimed at eliminating illegal mining operations and protecting the environment. Rare earths—named as critical materials in many countries because of their use in various high-tech and clean-energy technologies—provide a significant opportunity for China to utilize its natural resources to promote a transition toward a hybrid economy. While China does not have an official economic transition policy, their strategy of decreasing rare-earth export quotas will ensure more of these critical materials stay in country for development into more valuable products.
rebate import duties on components and vehicles. These programs resulted in the establishment of in-country manufacturing for catalytic converters as well as other automotive components and light motor vehicles. Catalytic converters are South Africa’s largest and most revenue-generating automotive component export. South Africa boasts approximately 50 catalytic converter manufacturers and controls about 14% of the global catalytic converter industry. Over the last 15 years the industry has invested more than R$5 billion (approximately USD$500 million) to develop catalytic converter production in South Africa. In addition to investments in equipment and plants, significant funds have been spent providing high-tech training and education for South Africans who are employed by the industry—a key part of the transition to a hybrid economy. The development of the catalytic converter industry in South Africa has widely been hailed as a significant success; however, over the course of the MIDP and recent transition to the APDP, the amount of credit earned for catalytic converter exports has dropped. This drop has precipitated an industry shift away from South Afri
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