IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v37y2009i3p1128-1144.html
   My bibliography  Save this article

Policies to improve the local impact from hydrocarbon extraction: Observations on West Africa and possible lessons for Central Asia

Author

Listed:
  • Klueh, Ulrich H.
  • Pastor, Gonzalo
  • Segura, Alonso

Abstract

The paper offers specific inputs to the debate on local content promotion in the oil industries of West Africa and Central Asia. To this end, we document the international experience with local content promotion to derive best practices in the field. We then use a case study approach to devise a simple analytical framework for rationalizing the selection of viable sectors for local content promotion, in an attempt to make operational one of the best practice principles (efficiency) developed before. By proposing specific rules regarding the acceptability of a project, the analysis seeks to add rigor and address distortions on localization outcomes from rent-seeking. The emphasis is not on supporting efforts to "pick winners" and subsidize them through a range of by and large discredited instruments. Rather, the paper focuses on the specific public inputs the government would have to provide to support an otherwise market-driven process.

Suggested Citation

  • Klueh, Ulrich H. & Pastor, Gonzalo & Segura, Alonso, 2009. "Policies to improve the local impact from hydrocarbon extraction: Observations on West Africa and possible lessons for Central Asia," Energy Policy, Elsevier, vol. 37(3), pages 1128-1144, March.
    • Handle: RePEc:eee:enepol:v:37:y:2009:i:3:p:1128-1144
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301-4215(08)00397-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Howard Pack & Kamal Saggi, 2006. "Is There a Case for Industrial Policy? A Critical Survey," The World Bank Research Observer, World Bank, vol. 21(2), pages 267-297.
    2. Auty, Richard M., 2001. "The political economy of resource-driven growth," European Economic Review, Elsevier, vol. 45(4-6), pages 839-846, May.
    3. Venables, Anthony J. & Maloney, William & Kokko, Ari & Bravo Ortega, Claudio & Lederman, Daniel & Rigobón, Roberto & De Gregorio, José & Czelusta, Jesse & Jayasuriya, Shamila A. & Blomström, Magnus & , 2007. "Natural Resources: Neither Curse nor Destiny," IDB Publications (Books), Inter-American Development Bank, number 350, December.
    4. Pack, Howard & Saggi, Kamal, 2006. "The case for industrial policy : a critical survey," Policy Research Working Paper Series 3839, The World Bank.
    5. Claudio Bravo-Ortega & Jose De Gregorio, 2002. "The Relative Richness of the Poor? Natural Resources, Human Capital and Economic Growth," Working Papers Central Bank of Chile 139, Central Bank of Chile.
    6. Dani Rodrik, 2007. "Introductiion to One Economics, Many Recipes: Globalization, Institutions, and Economic Growth," Introductory Chapters, in: One Economics, Many Recipes: Globalization, Institutions, and Economic Growth, Princeton University Press.
    7. Saicheua, Supavud, 1987. "Input substitution in Thailand's manufacturing sector : Implications for energy policy," Energy Economics, Elsevier, vol. 9(1), pages 55-63, January.
    8. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," CEPR Discussion Papers 4767, C.E.P.R. Discussion Papers.
    9. International Monetary Fund, 2003. "Angola: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2003/292, International Monetary Fund.
    10. Mr. Alonso A Segura Vasi & Walter Zarate & Mr. Gonzalo C Pastor Campos & Mr. Ulrich H Klueh, 2007. "Inter-sectoral Linkages and Local Content in Extractive Industries and Beyond – The Case of São Tomé and Príncipe," IMF Working Papers 2007/213, International Monetary Fund.
    11. Al-Mutairi, Naief & Burney, Nadeem A., 2002. "Factor substitution, and economies of scale and utilisation in Kuwait's crude oil industry," Energy Economics, Elsevier, vol. 24(4), pages 337-354, July.
    12. International Monetary Fund, 2006. "Republic of Equatorial Guinea: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2006/237, International Monetary Fund.
    13. Kashani, Hossein A., 2005. "Regulation and efficiency: an empirical analysis of the United Kingdom continental shelf petroleum industry," Energy Policy, Elsevier, vol. 33(7), pages 915-925, May.
    14. Mr. Alonso A Segura Vasi, 2006. "Management of Oil Wealth Under the Permanent Income Hypothesis: The Case of São Tomé and Príncipe," IMF Working Papers 2006/183, International Monetary Fund.
    15. Andrew Cumbers & Danny Mackinnon & Keith Chapman, 2003. "Innovation, Collaboration, and Learning in Regional Clusters: A Study of SMEs in the Aberdeen Oil Complex," Environment and Planning A, , vol. 35(9), pages 1689-1706, September.
    16. Venables, Anthony J. & Maloney, William & Kokko, Ari & Bravo Ortega, Claudio & Lederman, Daniel & Rigobón, Roberto & De Gregorio, José & Czelusta, Jesse & Jayasuriya, Shamila A. & Blomström, Magnus & , 2007. "Natural Resources: Neither Curse nor Destiny," IDB Publications (Books), Inter-American Development Bank, number 350, December.
    17. Francisco M. Veloso, 2006. "Understanding Local Content Decisions: Economic Analysis And An Application To The Automotive Industry," Journal of Regional Science, Wiley Blackwell, vol. 46(4), pages 747-772, October.
    18. Andrew Cumbers, 2000. "Globalization, Local Economic Development and the Branch Plant Region: The Case of the Aberdeen Oil Complex," Regional Studies, Taylor & Francis Journals, vol. 34(4), pages 371-382.
    19. Lücke, Matthias & Rothert, Jacek, 2006. "Central Asia's comparative advantage in international trade," Kiel Economic Policy Papers 6, Kiel Institute for the World Economy (IfW Kiel).
    20. Dale Truett & Lila Truett, 1998. "A cost function analysis of the Mexican nonelectrical machinery industry," Applied Economics, Taylor & Francis Journals, vol. 30(8), pages 1027-1035.
    21. International Monetary Fund, 2006. "Guinea: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2006/025, International Monetary Fund.
    22. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rasoulinezhad, Ehsan & Sung, Jinsok & Talipova, Amina & Taghizadeh-Hesary, Farhad, 2022. "Analyzing energy trade policy in Central Asia using the intercountry trade force approach," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 441-454.
    2. Ngoasong, Michael Zisuh, 2014. "How international oil and gas companies respond to local content policies in petroleum-producing developing countries: A narrative enquiry," Energy Policy, Elsevier, vol. 73(C), pages 471-479.
    3. Nwankwo, Ebuka & Iyeke, Solomon, 2022. "Analysing the impact of oil and gas local content laws on engineering development and the GDP of Nigeria," Energy Policy, Elsevier, vol. 163(C).
    4. Irina Semykina, 2017. "Managing Regional Economic Development Through Local Content Requirements In Oil And Gas Industry," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 457-464.
    5. Lebdioui, Amir, 2022. "The political economy of moving up in global value chains: how Malaysia added value to its natural resources through industrial policy," LSE Research Online Documents on Economics 107523, London School of Economics and Political Science, LSE Library.
    6. Richard A Owusu & Terje I Vaaland, 2021. "Achieving Local Content in Extractive Industries of African Countries," International Journal of Innovation and Economic Development, Inovatus Services Ltd., vol. 7(1), pages 28-36, April.
    7. Simplice A. Asongu & Gerald Emmanuel Arhin & Abdul-Gafaru Abdulai & Justice Bawole, 2022. "The Political Economy of the Oil and Gas Sector in Emerging and Developing Countries," Working Papers of the African Governance and Development Institute. 22/029, African Governance and Development Institute..
    8. Wiig, Arne & Kolstad, Ivar, 2012. "If diversification is good, why don't countries diversify more? The political economy of diversification in resource-rich countries," Energy Policy, Elsevier, vol. 40(C), pages 196-203.
    9. Ovadia, Jesse Salah, 2016. "Local content policies and petro-development in Sub-Saharan Africa: A comparative analysis," Resources Policy, Elsevier, vol. 49(C), pages 20-30.
    10. Kimiagari, Salman & Mahbobi, Mohammad & Toolsee, Tushika, 2023. "Attracting and retaining FDI: Africa gas and oil sector," Resources Policy, Elsevier, vol. 80(C).
    11. Arena, Marika & Azzone, Giovanni & Dell’Agostino, Laura & Scotti, Francesco, 2022. "Precision policies and local content targets in resource-rich developing countries: The case of the oil and gas sector in Mozambique," Resources Policy, Elsevier, vol. 76(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mr. Alonso A Segura Vasi & Walter Zarate & Mr. Gonzalo C Pastor Campos & Mr. Ulrich H Klueh, 2007. "Inter-sectoral Linkages and Local Content in Extractive Industries and Beyond – The Case of São Tomé and Príncipe," IMF Working Papers 2007/213, International Monetary Fund.
    2. Daniel Lederman & William F. Maloney, 2012. "Does What You Export Matter? In Search of Empirical Guidance for Industrial Policies," World Bank Publications - Books, The World Bank Group, number 9371.
    3. Boyce, John R. & Herbert Emery, J.C., 2011. "Is a negative correlation between resource abundance and growth sufficient evidence that there is a "resource curse"?," Resources Policy, Elsevier, vol. 36(1), pages 1-13, March.
    4. Clements, Kenneth & Lan, Yihui & Roberts, John, 2008. "Exchange-rate economics for the resources sector," Resources Policy, Elsevier, vol. 33(2), pages 102-117, June.
    5. Silvana Sandonato & Henry Willebald, 2018. "Natural Capital, Domestic Product and Proximate Causes of Economic Growth: Uruguay in the Long Run, 1870–2014," Sustainability, MDPI, vol. 10(3), pages 1-26, March.
    6. Maty Konte, 2013. "A curse or a blessing? Natural resources in a multiple growth regimes analysis," Applied Economics, Taylor & Francis Journals, vol. 45(26), pages 3760-3769, September.
    7. Lazzarini, Sérgio G., 2012. "Strategizing by the Government: Industrial Policy and Sustainable Competitive Advantage," Insper Working Papers wpe_289, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    8. James L. Butkiewicz & Halit Yanikkaya, 2007. "Minerals, Openness, Institutions and Growth: An Empirical Analysis," Working Papers 07-04, University of Delaware, Department of Economics.
    9. Michiko Iizuka & Mulu Gebreeyesus, 2017. "Using Functions of Innovation Systems to Understand the Successful Emergence of Non-traditional Agricultural Export Industries in Developing Countries: Cases from Ethiopia and Chile," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(2), pages 384-403, April.
    10. Nuno Torres & Óscar Afonso & Isabel Soares, 2013. "A survey of literature on the resource curse: critical analysis of the main explanations, empirical tests and resource proxies," CEF.UP Working Papers 1302, Universidade do Porto, Faculdade de Economia do Porto.
    11. Haroon Bhorat & Francois Steenkamp & Christopher Rooney, "undated". "Africa’s Manufacturing Malaise," UNDP Africa Policy Notes 2016-03, United Nations Development Programme, Regional Bureau for Africa.
    12. Kaznacheev, Peter, 2013. "Resource Rents and Economic Growth: Economic and institutional development in countries with a high share of income from the sale of natural resources. Analysis and recommendations based on internatio," EconStor Research Reports 121950, ZBW - Leibniz Information Centre for Economics.
    13. Brunnschweiler, Christa N., 2008. "Cursing the Blessings? Natural Resource Abundance, Institutions, and Economic Growth," World Development, Elsevier, vol. 36(3), pages 399-419, March.
    14. Paul Collier & Benedikt Goderis, 2007. "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," CSAE Working Paper Series 2007-15, Centre for the Study of African Economies, University of Oxford.
    15. Guy Michaels, 2011. "The Long Term Consequences of Resource‐Based Specialisation," Economic Journal, Royal Economic Society, vol. 121(551), pages 31-57, March.
    16. Hailu, Degol & Kipgen, Chinpihoi, 2017. "The Extractives Dependence Index (EDI)," Resources Policy, Elsevier, vol. 51(C), pages 251-264.
    17. Guan, Jialin & Kirikkaleli, Dervis & Bibi, Ayesha & Zhang, Weike, 2020. "Natural resources rents nexus with financial development in the presence of globalization: Is the “resource curse” exist or myth?," Resources Policy, Elsevier, vol. 66(C).
    18. Boschini, Anne & Pettersson, Jan & Roine, Jesper, 2013. "The Resource Curse and its Potential Reversal," World Development, Elsevier, vol. 43(C), pages 19-41.
    19. Waqar Ahmed Wadho, 2014. "Education, Rent seeking and the Curse of Natural Resources," Economics and Politics, Wiley Blackwell, vol. 26(1), pages 128-156, March.
    20. Zaidi, Syed Anees Haider & Wei, Zixiang & Gedikli, Ayfer & Zafar, Muhammad Wasif & Hou, Fujun & Iftikhar, Yaser, 2019. "The impact of globalization, natural resources abundance, and human capital on financial development: Evidence from thirty-one OECD countries," Resources Policy, Elsevier, vol. 64(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:37:y:2009:i:3:p:1128-1144. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.