The resource-making state: liquefied natural gas production networks and state strategies for domestic market development in Indonesia

In this paper, we suggest that Global Production Network (GPN) scholars have yet to deal more substantively with how nation-states, often in alliance with firm actors, actively work to create markets for resources in global production networks. We argue in this paper that GPN scholars should be better attuned to both resource-making interventions and the governance of market development. Resource-making highlights the heterogeneity of the biophysical characteristics of physical entities which entails that certain natures are not readily made available as commodities in markets, but require specific infrastructures, technology, and organizational structures for commercialization. When private capital fails to create markets for resources on its own initiative, states may intervene by facilitating resource-making and governing market development through configurations of ownership, commodification, and risk allocation. In this paper, we explore how the relationship between resource-making and market governance shapes the possibilities and limitations for state strategies in global production networks. Our discussion in the paper is informed by an empirical case study of failed plans by the Indonesian government from 2016 to 2019 to draw upon public-private partnerships to create markets for LNG in the peripheral regions of the country. Despite Indonesia’s status as a globally significant LNG exporter, we find that the interorganizational structures and infrastructure needed to deliver natural gas to markets in peripheral regions contradict with the configurations of ownership, commodification, and risk allocation through which the Indonesian government has sought to realize state strategies, thus resulting in the underdevelopment of liquefied natural gas markets in Indonesia.