States and Companies Political Risks in the International Oil Industry

Subjects:

• Science » Energy/Natural Resources

Reviews:

• Lax attempts to develop a theoretical foundation for understanding the political risks that face transnational companies (sometimes also referred to as multinational or international corporate entities) in their worldwide operations. The author takes his material primarily from the histories of international oil companies and relevant government documents. In the author's scenario there are two sets of actors--the transnational corporations and the host state or states in which the corporation operates. The author examines the conflicts arising arising between these two entities because of differing goals and policies. Lax attributes part of the conflict to the Western intellectual tradition-- a tradition that separates politics from economics, going back to the writings of Adam Smith in the 18th century. For the host state, politics is the supreme element. Intially, host states mainly desire stability within their territories; thus transnational corporations tend to obtain good conditions for their new operations, which may take years to become profitable. By that time the host state has usually achieved stability and can make stronger demands on the transnational corporation. Thus the bargaining power of the corporation becomes weaker, as occurred in the oil industry first in Latin America and later in the Middle East. . . . The book is an improvement on the existing corporate political-risk literature. University collections.
  —Choice

Table of Contents:

• Introduction
• The Study of Political Risk
• The Relationship Between Host State and the TNC
• Policy and Risks
• Constraints and Opportunities
• Conclusion