International Partnerships, Foreign Control and Income Levels: Theory and Evidence
AbstractWe 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 ?firms 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?tability of the domestic resource endowment is high or intermediate, and home control with low relative pro?tability. 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 11/154.
Length: 67 pages
Date of creation: Oct 2011
Date of revision:
Property rights; control rights; income; oil; panel data;
Other versions of this item:
- Brunnschweiler, Christa N. & Valente, Simone, 2011. "International partnerships, foreign control and income levels: theory and evidence," MPRA Paper 34222, University Library of Munich, Germany.
- Christa N. Brunnschweiler & Simone Valente, 2012. "International partnerships, foreign control and income levels : theory and evidence," Working Paper Series 13412, Department of Economics, Norwegian University of Science and Technology.
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- F20 - International Economics - - International Factor Movements and International Business - - - General
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-07 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Megginson, William L., 2005. "The economics of bank privatization," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 1931-1980, August.
- Grossman, Sanford J. & Hart, Oliver D., 1986.
"The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration,"
3450060, Harvard University Department of Economics.
- Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
- Grossman, Sanford J & Hart, Oliver, 1985. "The Cost and Benefits of Ownership: A Theory of Vertical and Lateral Integration," CEPR Discussion Papers 70, C.E.P.R. Discussion Papers.
- Oliver Hart & Sanford Grossman, 1985. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Working papers 372, Massachusetts Institute of Technology (MIT), Department of Economics.
- Oliver Hart & Andrei Shleifer & Robert Vishny, 1996.
"The Proper Scope of Government: Theory and an Application to Prisons,"
Harvard Institute of Economic Research Working Papers
1778, Harvard - Institute of Economic Research.
- Hart, Oliver & Shleifer, Andrei & Vishny, Robert W, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1127-61, November.
- Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1996. "The Proper Scope of Government: Theory and an Application to Prisons," NBER Working Papers 5744, National Bureau of Economic Research, Inc.
- Frederick van der Ploeg & Anthony J. Venables, 2011.
"Harnessing Windfall Revenues: Optimal Policies for Resource‐Rich Developing Economies,"
Royal Economic Society, vol. 121(551), pages 1-30, March.
- Rick Van der Ploeg & Tony Venables, 2011. "Harnessing windfall revenues: Optimal policies for resource-rich developing economies," Economics Series Working Papers 543, University of Oxford, Department of Economics.
- Frederick Van der Ploeg & Anthony J. Venables, 2009. "Harnessing Windfall Revenues: Optimal Policies for Resource-Rich Developing Economies," CESifo Working Paper Series 2571, CESifo Group Munich.
- Daron Acemoglu & Simon Johnson, 2005.
Journal of Political Economy,
University of Chicago Press, vol. 113(5), pages 949-995, October.
- Hart, Oliver D. & Moore, John, 1990.
"Property Rights and the Nature of the Firm,"
3448675, Harvard University Department of Economics.
- Raghuram G. Rajan & Luigi Zingales, .
"Power in a Theory of the Firm,"
CRSP working papers
335, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002.
"Institutions and the resource curse,"
Development and Comp Systems
- Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Institutions and the resource curse," GE, Growth, Math methods 0210004, EconWPA.
- Mehlum, Halvor & Moene, Karl-Ove & Torvik, Ragnar, 2003. "Institutions and the resource curse," Memorandum 29/2002, Oslo University, Department of Economics.
- Halvor Mehlum & Karl Moene & Ragnar Torvik, 2004. "Institutions and the Resource Curse," DEGIT Conference Papers c009_012, DEGIT, Dynamics, Economic Growth, and International Trade.
- John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
- Wolf, Christian, 2009. "Does ownership matter? The performance and efficiency of State Oil vs. Private Oil (1987-2006)," Energy Policy, Elsevier, vol. 37(7), pages 2642-2652, July.
- Frederick van der Ploeg, 2011.
"Natural Resources: Curse or Blessing?,"
Journal of Economic Literature,
American Economic Association, vol. 49(2), pages 366-420, June.
- Andrew Mold & Sebastian Paulo & Annalisa Prizon, 2009. "Taking Stock of the Credit Crunch: Implications for Development Finance and Global Governance," OECD Development Centre Working Papers 277, OECD Publishing.
- Sergei Guriev & Anton Kolotilin & Konstantin Sonin, 2011.
"Determinants of Nationalization in the Oil Sector: A Theory and Evidence from Panel Data,"
Journal of Law, Economics and Organization,
Oxford University Press, vol. 27(2), pages 301-323.
- Sergei Guriev & Konstantin Sonin & Anton Kolotilin, 2007. "Determinants of Expropriation in the Oil Sector: A Theory and Evidence from Panel Data," Working Papers w0115, Center for Economic and Financial Research (CEFIR).
- Guriev, Sergei & Kolotilin, Anton & Sonin, Konstantin, 2008. "Determinants of Expropriation in the Oil Sector: A Theory and Evidence from Panel Data," CEPR Discussion Papers 6755, C.E.P.R. Discussion Papers.
- Pol Antr�s, 2005.
"Property Rights and the International Organization of Production,"
American Economic Review,
American Economic Association, vol. 95(2), pages 25-32, May.
- Antras, Pol, 2005. "Property Rights and the International Organization of Production," Scholarly Articles 3196326, Harvard University Department of Economics.
- Andrew Gelman, 2009. "A statistician’s perspective on “Mostly Harmless Econometrics: An Empiricist's Companion”, by Joshua D. Angrist and Jorn-Steffen Pischke," Stata Journal, StataCorp LP, vol. 9(2), pages 315-320, June.
- Timothy Besley & Maitreesh Ghatak, 2001.
"Government Versus Private Ownership Of Public Goods,"
The Quarterly Journal of Economics,
MIT Press, vol. 116(4), pages 1343-1372, November.
- Besley, Timothy J. & Ghatak, Maitreesh, 2001. "Government versus Private Ownership of Public Goods," CEPR Discussion Papers 2725, C.E.P.R. Discussion Papers.
- Daniel Hoechle, 2007. "Robust standard errors for panel regressions with cross-sectional dependence," Stata Journal, StataCorp LP, vol. 7(3), pages 281-312, September.
- Jodice, David A., 1980. "Sources of change in Third World regimes for foreign direct investment, 1968–1976," International Organization, Cambridge University Press, vol. 34(02), pages 177-206, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.