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Resource Nationalism - Limits to Foreign Direct Investment

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  • Gavin L. Kretzschmar
  • Axel Kirchner
  • Liliya Sharifzyanova

Abstract

Despite a global trend toward the privatization of state assets, host governments are consolidating ownership over strategically important domestic oil and gas resources, effectively limiting corporate foreign direct investment. These findings are supported by an analysis of global reserve acquisitions for the period 2000 Ð 2006, a period which saw listed national oil companies (NOCs) acquire over 82% of their reserves domestically, compared to only 25% for commercial operators. We also perform a regression analysis and find that political risk and reserve size are strongly related to state ownership retention, while the degree of state control is positively related to OPEC membership. Foreign direct investment is shown to be increasingly constrained to assets in low-risk developed countries or marginal oilfield assets.

Suggested Citation

  • Gavin L. Kretzschmar & Axel Kirchner & Liliya Sharifzyanova, 2010. "Resource Nationalism - Limits to Foreign Direct Investment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 27-52.
  • Handle: RePEc:aen:journl:2010v31-02-a02
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    JEL classification:

    • F0 - International Economics - - General

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