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Copy of norwegian FDIs in the salmon industry of chile

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Arnt Fløysand

on 2 December 2013

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Transcript of Copy of norwegian FDIs in the salmon industry of chile

Global demands - local development
The sustainability of the salmon industry in Southern Chile
Barton, J.R. and Fløysand, A. (2010) 'The Political Ecology of Chilean Salmon Aquaculture, 1982-2010: a trajectory from economic development to global sustainability' Global Environmental Change Vol. 20, 739-752.

Bostock, J (2011) The application of science and technology development in shaping current and future aquaculture production systems. Journal of Agricultural Science Vol. 149, 133–141.

Fløysand, A. and Barton, J.R. (forthcoming) Foreign Direct Investment, Local Development and Poverty Reduction: The Sustainability of the Salmon Industry in Southern Chile. In Brun et. al. Unravelling Marginalization, Voicing Change. Alternative Visions and Paths of Development. Ashgate Publishing Ltd, London.

Some facts on global demands

Theory and concepts: What characterize the relations between FDI and development?

The case of Norwegian FDI in Chile
Some facts on global demands

Neo-liberalism creates demands for cross-border investments looking for new spaces of production to serve global markets.

Outcome Foreign Direct Investments (FDI)
Theory and concepts
Our literature review demonstrates:

- FDI as progress
a situation in which there are extensive regional effects of FDI, such as employment, linkages to local industry, knowledge spillovers, innovation networks and technology transfer

- FDI as dependency
a situation in which the FDI influence means employment, but foreign control of the regional economy, capital flows out of the region, etc.

While the FDI-literature says less about
- the contextual dynamics of FDI and how this influence on power relations, regional development and poverty in developing countries

- FDI as sustainable development
What is a FDI ?

A FDI is a cross-border investment where an investor intends to establish a lasting financial interest and exert an effective influence on the activities of the investment object (Norges Bank)

An alternative definition of FDI The capital-actor-knowledge complex
The capital-actor-knowledge complex
A FDI is a cross-border mix of social, cultural and economic capital
Norwegian FDI in Chile
Research question:
Explore outcomes of FDI/salmon industry on local development

Progress? Dependency? Sustainability?
Narratives:

FDI as progress
a situation in which there are extensive regional effects of FDI, such as employment, linkages to local industry, knowledge spillovers, innovation networks and technology transfer

FDI as dependency
a situation in which the FDI influence means dependent development characterized by foreign control of the regional economy and environmental vulnerability, etc.

A new emerging narrative?
FDI as sustainable development

Until recently FDI as progress held by the industry, national and regional government
FDI as dependency
The density of licenses around Chiloe
Red: Norwegian controlled licenses
FDI as sustainable development?
CORPORATE SOCIAL RESPONSIBILITY

Stortingsmelding 10 (2009): The Norwegian government expects Norwegian companies to be forerunners in implementing CSR and in setting standards internationally

Norwegian companies are expected to act in a socially responsible way, also internationally

CSR needs to be integrated as part of core business

CSR is becoming more and more a competitive and strategic issue
CSR
How ISO26000 defines social responsibility:
The 7 principles of social responsibility
Accountability: an organization should be accountable for its impacts on society and the environment

Transparency: an organization should be transparent in its decisions and activities that impact on society and the environment

Ethical behaviour: an organization should behave ethically at all times

Respect for stakeholder interests: an organization should respect, consider and respond to the interests of its stakeholders

Respect for the rule of law: an organization should accept that respect for the rule of law is mandatory

Respect for international norms of behaviour: an organization should respect international norms of behaviour, while adhering to the principle of respect for the rule of law

Respect for human rights: an organization should respect human rights and recognize both their importance and their universality
too many and too close licenses compared to international standards
Over 1174 licenses in Region X and XI and 57 in Region XII
No limitations on growth
No legal framework to control biomass production (so far)
Why collapse?
Concentration of production

The credibility of the progress narrative received a blow with the emergence of the ISA (infectious salmon anaemia) virus in 2007, causing a crisis in the salmon farming industry that resulted in fish slaughter, production-site closures, and bankruptcies of firms.

The crisis hit hardest in the communities on Chiloé, as some 10,000 workers had lost their jobs by April 2009.

FDI as dependency

«I had some contact with the industry in 2001-2002, and everybody said that the big thing in Chile was to produce large volumes. Volumes, volumes, volumes. Quality as such is not important, but volume is. Everybody down there just waited for a collapse»

«I think the whole system created the crisis. It was the way we were running the salmon farming in Chile that was the problem. If it wasn’t ISA, it would have been other things, it would have been caligus [sea lice], it would have been SRS [Salmon Rickettsial Syndrome], it would have been something else»

«viewed from outside - without anyone stating it internally (name of company) - it is that one gets caught, in a way, stylistically one might say that it is greed»

«And because there’s so many companies doing it [taking risks], and the scale of the business is so big, when a problem appeared, not only did it develop very quickly because of the density of farms and lack of controls. There were not any processes or regulations to manage it. There was not a way to address the problem. It’s like getting to a point where you realize there’s a problem, you admit there’s a problem, but there’s no doctor»
1990-2007: The mainstream narrative on salmon farming as progress served the growth strategy of the industry, but did not promote governance and ecological sustainability.

2008: Concentration of power and production made the production collapse

2011: The industry has recovered and regained financial support
Recent production results an indicator of the exceptional conditions for salmon farming in Chile

Post-crisis: Towards sustainable development?
New regulation regime/more governance, but the industry are still pushing for rapid production growth, perhaps once again crossing the carrying capacity of nature and society.
Based on the results of the Socioeconomic Survey of the Ministry of Planning for the years 2000 and 2003, it appears that salmon farming communes in the X region reduced their rates of poverty and homelessness with 13% and 42% respectively, well above the national average reduction of 6% and 10%

(Source: www.salmonchile.cl, 25.10.11)

FDI as Progress: Poverty Reduction
A literature review by Klein et al. (2001) demonstrates that most agree that FDI has the potential to encourage national economic growth and local development. It concludes that FDI is a:
“key ingredient for successful economic growth in developing countries” and of the tools available, “among the most effective ones in the fight against poverty.”



New coastal management plan with zoning and fallow periods

Land-based hatcheries

Penalties for companies that violate regulations

Penalties for companies guilty of anti-union practices

Etc.
Neo-liberalism creates demands for cross-border investments looking for new spaces of production to serve global food markets.

Norwegian FDI in Chile:

1990-2007: The mainstream narrative on salmon farming as progress served the growth strategy of the industry, but did not promote governance and ecological sustainability.

2008: Concentration of power and production made the production collapse

2011: The industry has recovered and regained financial support

Post-crisis: Towards sustainable development?
New regulation regime/more governance, but the industry are still pushing for rapid production growth, perhaps once again crossing the carrying capacity of nature and society.
Yield per smolt (kg harvested per smolt)
Best ever
performance
Post-crisis: Towards sustainability?
New regulation regime: zoning, fallow periods, land based hatcheries
Global demands - local development: The sustainability of the salmon industry in Southern Chile




Some of the firms fear that the growth is coming too early to be handled by the new regulation regime:

«We now pass the winter 2011, and it’s suddenly spring, with increased water temperatures and once again very much biomass in the sea water […] I’m a little bit nervous»

«Our concern is that, we think that growth is too fast, while the regulation is not developed in order to handle this growth. And that’s why we kept our production volume as it was last year […] Because we really don’t think the system is ready»

«We have the new rules, but to me it is not proven we are able to enforce the rules. To start moving very fast again, pressing the environment, - in a critical zone like Chiloé - one or two farms of bad practice can turn the total system into a new collapse....»



“I don’t think you can have teams playing together in market conditions without a ref (referee)”
Thank you for listening
This narrative stresses that production, export and employment levels have risen substantially over time, and that spillover effects, such as successively more home-grown technology and competence, as well as trickle-down effects as poverty reduction, have been generated
However, there are more critical accounts as well, and while these agree that Chilean neoliberal policies have performed strongly in terms of macroeconomic factors, they point out that little change has been registered in redistribution and social resource allocation
Source: FAO, Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010 Revision
Source: Kontali Analyse, FAO, OECD
Development as
Discourse
Lecture I

Development as discourse, materiality and practice

Development as
Materiality
Lecture II

Development as
Practice
Lecture III
Full transcript