Brunnschweiler, Christa N. and Valente, Simone (2011): International partnerships, foreign control and income levels: theory and evidence.
Download (538kB) | Preview
We analyze the effects of different regimes of control rights over critical resources on the total domestic income of open economies. We consider home control, foreign control, and international partnerships in a theoretical model where contracts are incomplete, resource exploitation requires local capital, and foreign technologies are more efficient. Enacting foreign control is never optimal, and assigning complete residual rights to foreign fi�rms reduces domestic income. Two testable predictions are derived. First, international partnerships tend to generate higher domestic income than foreign control. Second, the typical regime choice is either partnership or foreign control when the international relative pro�fitability of the domestic resource endowment is high or intermediate, and home control with low relative pro�fitability. We test these predictions using a new dataset on petroleum ownership structures for up to 68 countries between 1867-2008, �finding strong empirical support for the theoretical results.
|Item Type:||MPRA Paper|
|Original Title:||International partnerships, foreign control and income levels: theory and evidence|
|Keywords:||Property rights; control rights; income; oil; panel data|
|Subjects:||D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights
F - International Economics > F2 - International Factor Movements and International Business > F20 - General
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products
|Depositing User:||Simone Valente|
|Date Deposited:||20. Oct 2011 14:07|
|Last Modified:||18. Mar 2015 22:37|
Acemoglu, D., Johnson, S. (2005). Unbundling institutions. Journal of Political Economy 113 (5): 949-995.
Al-Obaidan, A.M., Scully, G.W. (1992). E¢ ciency di¤erences between private and state-owned enterprises in the international petroleum industry. Applied Economics 24 (2): 237-246.
Angrist, J.D., Pischke, J.-S. (2009). Mostly harmless econometrics: An empiricist�s companion. Princeton, NJ: Princeton University Press.
Antràs, P. (2005). Property rights and the international organization of production. American Economic Review 95 (2): 25-32.
Baltagi, B.H. (2008). Econometric analysis of panel data. Chichester, UK: Wiley & Sons.
Barro, R.J., Lee, J.-W. (2010). A new data set of educational attainment in the world: 1950- 2010. NBER Working Paper No. 15902.
Besley, T., Gathak, M. (2001). Government versus private ownership of public goods. Quar- terly Journal of Economics 116 (4): 1343-1372.
Besley, T., Gathak, M. (2010). Property rights and economic development. In D. Rodrik, M.
Rosenzweig (eds.), Handbook of Development Economics, Vol. 5, ch. 68: 4525-4595.
BP (2010). Statistical Review of World Energy, June 2010, database available at: http://www.bp.com/statisticalreview
Bundesanstalt für Geowissenschaften und Rohsto¤e (1989, 2003, 2007). Reserven, Ressourcen und Verfügbarkeit von Energierohsto¤en, Stuttgart : Schweizerbart�sche Verlagsbuch- handlung.
Driscoll, J.C., Kraay, A.C. (1998). Consistent covariance matrix estimation with spatially dependent panel data. Review of Economics and Statistics 80: 549-560.
Eaton, J., Gersovitz, M. (1983). Country risk: Economic aspects. In R.J. Herring (ed.), Managing international risk. New York: Cambridge University Press.
EIA, Energy Information Administration (2010). Crude oil proved reserves 1980-2008, data- base accessed September 2010, available at http://www.eia.gov/petroleum/
Grossman, S.J., Hart, O.D. (1986). The costs and bene�ts of ownership: A theory of vertical and lateral integration. Journal of Political Economy 94 (4): 691-719.
Guriev, S., Kolotilin, A., Sonin, K. (2011). Determinants of nationalization in the oil sector: A theory and evidence from panel data. Journal of Law, Economics & Organization 27 (2): 301-323.
Hart, O., Moore, J. (1990). Property rights and the nature of the �rm. Journal of Political Economy 98 (6): 1119-1158.
Hart, O., Shleifer, A., Vishny, R.W. (1997). The proper scope of government: Theory and an application to prisons. Quarterly Journal of Economics 112 (4): 1127-1161.
Hoechle, D. (2007). Robust standard errors for panel regressions with cross-sectional depen- dence. Stata Journal 7 (3): 1-31.
IGS, Institute of Geological Sciences (various years 1950-1969). Statistical Summary of the Mineral Industry: World Production, Exports and Imports. London: Her Majesty�s Sta- tionery O¢ ce.
IGS, Institute of Geological Sciences (various years since 1970). World mineral statistics: Production, exports, imports. London: Her Majesty�s Stationery O¢ ce.
Jenkins, G. (1989). Statistics: oil and energy prices, energy reserves, production, trade, consumption, oil re�ning, oil production and sales, petrochemicals, oil market shares. In Oil economists�handbook, 5th ed. vol. 1, London: Elsevier Applied Sciences.
Jodice, D.A. (1980). Sources of change in Third World regimes for foreign direct investment, 1968-1976. International Organization 34 (2): 177-206.
Jones Luong, P., Weinthal, E. (2001). Prelude to the resource curse: Explaining oil and gas development strategies in the Soviet successor states and beyond. Comparative Political Studies 34 (4): 367-99.
Jones Luong, P., Weinthal, E. (2010). Why oil is not a curse: Ownership structure and insti- tutions in the petroleum rich Soviet successor states. New York: Cambridge University Press.
Kobrin, S.J. (1984). The nationalisation of oil production, 1918-1980. In D.W. Pearce, H.
Siebert, I. Walter (eds.) Risk and the political economy of resource development. New York: St. Martin�s Press.
Kobrin, S.J. (1985). Di¤usion as an explanation of oil nationalization, or the domino e¤ect rides again. Journal of Con�ict Resolution 29 (1): 3-32.
Maddison, A. (2006). Historical Statistics of the World Economy: 1-2006 AD. Database available at http://www.ggdc.net/MADDISON/oriindex.htm
Marshall, M., Jaggers, K., Gurr, T.R. (2010). Polity IV Project: Political Regime Character- istics and Transitions, 1800-2010. Database available at: http://www.systemicpeace.org/polity/polity4.htm
Megginson, W.L. (2005). The �nancial economics of privatization. New York : Oxford Uni- versity Press.
Mold, A., Paulo, S., Prizzon, A. (2009). Taking Stock of the Credit Crunch: Implications for Development Finance and Global Governance. OECD Development Centre Working Paper n. 277.
Myers Ja¤e, A. (2007). Iraq�s oil sector: Past, present and future. James A. Baker III Institute for Public Policy, Rice University, mimeo.
Onorato, W.T. (1995). Legislative frameworks used to foster petroleum development. World Bank Policy Research Working Paper n. 1420.
Philip, G. (1994). The political economy of international oil. Edinburgh: Edinburgh University Press.
Rajan, R., Zingales, L. (1998). Power in a theory of the �rm. Quarterly Journal of Economics 113 (2): 387-432.
Randall, L. (1987). The political economy of Venezuelan oil. New York: Praeger.
Solberg, C.E. (1979). Oil and nationalism in Argentina: A History. Stanford: Stanford University Press.
Taverne, B. (1994). An introduction to the regulation of the petroleum industry. International Energy and Resource Law & Policy Series. London: Graham & Trotman.
The Conference Board Total Economy Database (2011), January 2011, accessed March 12, 2011, available at http://www.conference-board.org/data/economydatabase/
van der Ploeg, F. (2011). Natural resources: Curse or blessing?. Journal of Economic Litera- ture 49 (2): 366-420.
Vrankel, P.H. (1980). The rationale of National Oil Companies. In United Nations Centre for Natural Resources, Energy and Transport (UNCRET), State Petroleum Enterprises in Developing Countries. New York: Pergamon Press.
Wolf, C. (2009). Does ownership matter? The performance and e¢ ciency of state oil vs. private oil (1987-2006). Energy Policy 37 (7): 2642-2652.
Wooldridge, J.M. (2002). Econometric analysis of cross-section and panel data. Cambridge, MA: MIT Press.