Alternatives to local content

Ivar Kolstad and Abel Kinyondo

No wp-2015-106, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This paper suggests that an optimal local content policy in the context of flawed institutions is a more minimal one than those typically pursued by developing countries with recently discovered petroleum reserves. We argue that local content requirements need to be seen as a public expenditure question: such requirements increase multinationals' costs and hence reduce the taxes that can be extracted from these companies. There are thus opportunity costs in imposing local content requirements, since the forgone taxes could be used in other ways to improve development prospects.

Keywords: Public expenditures; Natural resources (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (3)

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