Resource nationalism: risks and rewards

Resource nationalism refers to policies that countries adopt to try to increase their share of the profits from the extraction of resources on their territory. The term arose with reference to the nationalization of oilfields in Mexico and the Persian Gulf; and now is applied to a broad range of mining projects. Resource nationalism sits at the intersection of three interlocking cycles. First, there is the life-cycle of the individual project: the initial bargain, project development, operational profits or losses, recriminations and re-negotiation. Second, there are global commodity price cycles which sweep individual countries into expansionist surges followed by recession and retrenchment. Third, there is a political business cycle, where politicians make promises to win elections, and then once in office have to decide and whether and how to implement them. Mainstream economists decry the impact of resource nationalism, but it remains a common feature of both democratic and authoritarian regimes.