Theory of bargaining between multinational corporations and developing countries over mineral and petroleum-extraction contracts

Thesis/Dissertation · Thu Jan 01 04:00:00 EST 1987

OSTI ID:7035834

King, P G

The history of negotiations between multinational corporations and less-developed countries involved in mineral and petroleum extraction has been widely examined. Virtually all case studies of the history of negotiations over these contracts demonstrate that, over time, the contracts tend to be renegotiated on terms more favorable to the developing country. This thesis begins by examining three case studies of negotiations between Third World countries and mineral or petroleum extracting multinational corporations: bauxite in Jamaica, petroleum in Indonesia, and copper in Chile. Evidence is presented to demonstrate that the history of negotiations in Jamaica and Indonesia is inconsistent with the often cited theory (Morgan (1975)) that the LDC's increase in profit-share stems from the country's development of negotiating, supervisory, and operating skills. However, in all of these case studies, renegotiations often took place when the country was experiencing an economic or political crisis. The contract renegotiations appear to be an (often successful) attempt by the ruling regime to maintain power. Another aspect of mineral and petroleum extraction is that investment tends to be lumpy. Typically, mineral and petroleum extraction involves an enormous initial investment within the sovereign territory of the LDC, generally financed by the MNC.

• Research Organization: Cornell Univ., Ithaca, NY (USA)
• OSTI ID: 7035834
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
290400* -- Energy Planning & Policy-- Energy Resources
CONTRACTS
DEVELOPING COUNTRIES
INDUSTRY
INVESTMENT
MINERAL RESOURCES
MULTINATIONAL ENTERPRISES
NEGOTIATION
PETROLEUM INDUSTRY
PRODUCTION
RESOURCES