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. 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.
    2. 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.
    3. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," Working Paper Series rwp04-047, Harvard University, John F. Kennedy School of Government.
    4. 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.
    5. 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.
    6. 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.
    7. Auty, Richard M., 2001. "The political economy of resource-driven growth," European Economic Review, Elsevier, vol. 45(4-6), pages 839-846, May.
    8. 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.
    9. 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.
    10. Pack, Howard & Saggi, Kamal, 2006. "The case for industrial policy : a critical survey," Policy Research Working Paper Series 3839, The World Bank.
    11. 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.
    12. Saicheua, Supavud, 1987. "Input substitution in Thailand's manufacturing sector : Implications for energy policy," Energy Economics, Elsevier, vol. 9(1), pages 55-63, January.
    13. International Monetary Fund, 2003. "Angola: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2003/292, International Monetary Fund.
    14. 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.
    15. 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.
    16. 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.
    17. International Monetary Fund, 2006. "Republic of Equatorial Guinea: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2006/237, International Monetary Fund.
    18. International Monetary Fund, 2006. "Guinea: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2006/025, International Monetary Fund.
    19. 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.
    20. 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. 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.
    2. 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.
    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. Kimiagari, Salman & Mahbobi, Mohammad & Toolsee, Tushika, 2023. "Attracting and retaining FDI: Africa gas and oil sector," Resources Policy, Elsevier, vol. 80(C).
    7. 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).
    8. 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 22/029, European Xtramile Centre of African Studies (EXCAS).
    9. 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.
    10. 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.
    11. 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.

    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. Coxhead, Ian, 2007. "A New Resource Curse? Impacts of China's Boom on Comparative Advantage and Resource Dependence in Southeast Asia," World Development, Elsevier, vol. 35(7), pages 1099-1119, July.
    5. Shu Yang & Elyas Abdulahi & Muhammad Afaq Haider & Mohammed Asif Khan, 2019. "Revisiting the Curse: Resource Rent and Economic Growth of Sub-Sahara African Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 9(1), pages 121-130.
    6. Dauvin, Magali & Guerreiro, David, 2017. "The Paradox of Plenty: A Meta-Analysis," World Development, Elsevier, vol. 94(C), pages 212-231.
    7. Coxhead, Ian, 2004. "International Trade and the Natural Resource 'Curse' in Southeast Asia: Does China's Growth Threaten Regional Development," Staff Paper Series 480, University of Wisconsin, Agricultural and Applied Economics.
    8. Baena, César & Sévi, Benoît & Warrack, Allan, 2012. "Funds from non-renewable energy resources: Policy lessons from Alaska and Alberta," Energy Policy, Elsevier, vol. 51(C), pages 569-577.
    9. Al Raee, Mueid & De Crombrugghe, Denis & Ritzen, Jo, 2019. "No evidence of an oil curse: Natural resource abundance, capital formation and productivity," MERIT Working Papers 2019-023, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. 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.
    11. Raphael Kaplinsky & Mike Morris, 2016. "Thinning and Thickening: Productive Sector Policies in The Era of Global Value Chains," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 28(4), pages 625-645, September.
    12. Edward Barbier, 2010. "Corruption and the Political Economy of Resource-Based Development: A Comparison of Asia and Sub-Saharan Africa," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(4), pages 511-537, August.
    13. James L. Butkiewicz & Halit Yanikkaya, 2007. "Minerals, Openness, Institutions and Growth: An Empirical Analysis," Working Papers 07-04, University of Delaware, Department of Economics.
    14. Weldegiorgis, Fitsum S. & Dietsche, Evelyn & Franks, Daniel M., 2021. "Building mining's economic linkages: A critical review of local content policy theory," Resources Policy, Elsevier, vol. 74(C).
    15. 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.
    16. 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.
    17. William F. Maloney, 2002. "Missed Opportunities: Innovation and Resource-Based Growth in Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2002), pages 111-168, August.
    18. Clements, Kenneth & Lan, Yihui & Roberts, John, 2008. "Exchange-rate economics for the resources sector," Resources Policy, Elsevier, vol. 33(2), pages 102-117, June.
    19. Barbier,Edward B., 2007. "Natural Resources and Economic Development," Cambridge Books, Cambridge University Press, number 9780521706513.
    20. Mignamissi, Dieudonné & Malah Kuete, Yselle Flora, 2021. "Resource rents and happiness on a global perspective: The resource curse revisited," Resources Policy, Elsevier, vol. 71(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.