GUIDANCE FOR GOVERNMENTS: LOCAL CONTENT POLICIES

This executive summary provides a framework for governments to design and implement local content policies in the mining sector to promote inclusive economic development and diversification. It outlines a four-step process—aligning with national objectives, taking stock of capabilities, crafting specific policy instruments, and establishing monitoring mechanisms—while warning that these policies must be context-specific and compliant with international trade laws.

• Local content policies are intended to address the challenges faced by resource-rich countries, such as undiversified economic structures, weak industrial bases, high unemployment, and vulnerability to commodity cycles.
• The guidance identifies five primary objectives for local content policies: increasing the procurement of local goods and services, increasing the hiring of local workers, fostering spillover benefits into non-mining sectors, increasing local processing (beneficiation) of mining products, and building the capacity of local operators, including state-owned enterprises.
• Governments are advised to follow a four-step implementation process: first, ensuring fit with national development objectives; second, taking stock of the political, socioeconomic, and geological context and domestic capabilities; third, crafting the policies; and fourth, establishing monitoring, review, and enforcement mechanisms.
• Local procurement policies can be defined by geography (national, regional, or community level), value addition (substantial local economic activity), or ownership (local participation in management, equity, or employment).
• Local employment policies are divided into regulatory 'stick'-based approaches (such as mandated percentages, visa restrictions, and localization plans) and facilitative 'carrot'-based approaches (such as fiscal incentives and preferences in contract awards).
• Downstream linkages, or beneficiation, aim for diversification within the mining sector through processing. Success depends on critical prerequisites including location, infrastructure, reliable and inexpensive energy, a competitive labour force, and proximity to raw materials.
• Technological evolution, specifically automation, poses a risk to local content goals by reducing employment per unit of value, which in turn lowers domestic procurement spending on employee-linked items like food and housing.
• Local content policies may conflict with international trade and investment law, particularly World Trade Organization (WTO) rules that prohibit performance requirements or advantages conditioned on the use of local content.

APA

International Institute for Sustainable Development (2018). GUIDANCE FOR GOVERNMENTS: LOCAL CONTENT POLICIES. https://www.iisd.org/system/files/publications/igf-local-content-executive-summary-en.pdf

Chicago

International Institute for Sustainable Development. GUIDANCE FOR GOVERNMENTS: LOCAL CONTENT POLICIES. 2018. https://www.iisd.org/system/files/publications/igf-local-content-executive-summary-en.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=GUIDANCE FOR GOVERNMENTS: LOCAL CONTENT POLICIES |date=2018 |url=https://www.iisd.org/system/files/publications/igf-local-content-executive-summary-en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2018guidance, author = {{International Institute for Sustainable Development}}, title = {{GUIDANCE FOR GOVERNMENTS: LOCAL CONTENT POLICIES}}, institution = {International Institute for Sustainable Development}, year = {2018}, url = {https://www.iisd.org/system/files/publications/igf-local-content-executive-summary-en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }