Empirical Models of Political Risks in U.S. Oil Production Operations in Venezuela
In 9 of the years between 1961 and 1978, Venezuelan regimes took actions adverse to the profitability of l U.S oil companies’ local production operations. In this study 2 time-series discriminant models were developed for classifying each of the 18 years according to the occurrence of such action. In the first model, adverse government action was found more likely to occur following years of economic decline and periods when U.S. companies earned high profits from petroleum investments in Venezuela. In the second model, government action tended to occur after periods of relative deprivation experienced by Venezuelans. To illustrate the use of discriminant models in forecasting political risks, hypothetical scenarios were formulated from which projections were made through 1985 of the likelihood of government action against those US oil companies’ operations remaining since the nationalization of petroleum.© 1984 JIBS. Journal of International Business Studies (1984) 15, 63–95
Volume (Year): 15 (1984)
Issue (Month): 1 (March)
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