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Offshore finance and corruption in oil licensing

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  • Marcolongo, Giovanna
  • Zambiasi, Diego

Abstract

Does the awarding of oil and gas licenses increase corruption? We answer this question by exploiting leaked data on the incorporation of shell companies and detailed information on the awarding of oil and gas licenses. Using this data, we construct a new dataset covering 119 countries over the period 1990–2014. Shell companies, by providing secrecy to their ultimate beneficiaries, are an ideal vehicle to channel bribes to officials involved in the awarding of oil licenses. We consider the incorporation of offshore entities as an indicator of corruption risk. We find that the number of new shell companies increases by 11% in the period around the awarding of an exploration license. We interpret this evidence to be a strong indicator that the award of an exploration license increases the risk of corruption. Consistent with rent-maximising behaviour, this association is stronger when the price of oil increases.

Suggested Citation

  • Marcolongo, Giovanna & Zambiasi, Diego, 2024. "Offshore finance and corruption in oil licensing," Energy Economics, Elsevier, vol. 137(C).
    • Handle: RePEc:eee:eneeco:v:137:y:2024:i:c:s014098832400495x
    DOI: 10.1016/j.eneco.2024.107787
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    More about this item

    Keywords

    Oil; Extractives; Natural resources; Corruption; Tax havens; Shell companies;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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