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Expert briefing
Publication date: 10 August 2016

The outlook for offshore oil.

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Article
Publication date: 2 September 2014

Kwasi Dartey-Baah, Kwesi Amponsah-Tawiah and David Aratuo

The paper aims to assess the institutional readiness of Ghana prior to and after the production of her first oil. The paper also assesses the influence of politics in…

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Abstract

Purpose

The paper aims to assess the institutional readiness of Ghana prior to and after the production of her first oil. The paper also assesses the influence of politics in directing the appropriate use of the oil rents in facilitating the developmental needs of the country.

Design/methodology/approach

The paper uses a literature review of the main theories regarding national politics and institutional policies in explaining the economic demise of a country due to a natural resource find. It also uses the natural resource find in Norway as a case study, drawing lessons from the effectiveness of Norway’s institutional policies in harnessing maximum benefits from their oil find and how developing nations such as Ghana can do same.

Findings

The paper establishes that Ghana’s institutional architecture as regards the production of oil and gas is fraught with inadequacies on all fronts as regards regulations, regulators and the needed logistics. Additionally, the paper also highlights the role of Ghana’s political elite in perpetuating these institutional inadequacies.

Originality/value

The paper highlights the insufficiencies in the institutional readiness for Ghana’s oil find and brings to the fore the influence of Ghana’s politics in contributing to these inadequacies.

Details

International Journal of Law and Management, vol. 56 no. 5
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 20 October 2020

Mahieddine Adnan Ghecham

This study aims at increasing the authors’ understanding how and why the oil curse takes place.

Abstract

Purpose

This study aims at increasing the authors’ understanding how and why the oil curse takes place.

Design/methodology/approach

The study uses a structural equation model (SEM) and stochastic frontier analysis (SFA) in order to underline the mechanism under which the oil curse operates.

Findings

The study shows that oil abundance could lead to inefficient resource allocation. This inefficiency is strongly correlated with a weak institutional setting which would lead to accumulated external debt and ultimately to poor economic performance.

Research limitations/implications

The quality of institutions and governance plays a major role in defining government success in allocating public resources efficiently. In a weak institutional setting, characterized with lack of accountability oil rents can promote rent-seeking behavior of public agents; a type of behavior that promotes misallocation and waste of resources. This in turn undermines public finances and leads to external debt accumulation. Debt per se is not necessarily a bad thing, but it has a turning point beyond which it can be a source of economy for countries (particularly countries with limited diversified source of revenue and inefficient public sector). It is to note that the authors work does not refute the positive impact that the increase in oil value has on economic growth (e.g. Nusair, 2016). However, it reminds policy makers that in order to sustain this impact over long term, it is necessary to build a strong institutional framework that prevents inefficient use of resource allocation as it could result in rapid accumulation of debt over short period of time. The adoption of sovereign wealth funds (SWFs) by a number of oil rich countries has helped them to manage adverse oil shocks. Nonetheless, the effectiveness of these funds could be limited in a country whose institutions are not very strong. Characterized by a mediocre institutional setting, Algeria's sovereign fund, for example, has lost 67% of its reserves over just two years (2014–2015) before reaching the level zero by February 2017 following the drop of oil prices in 2015 (see Central Bank of Algeria, 2017). Also, the foreign exchange reserves of the country experienced a drop of more than 72% over a short period of time (2014–2020), leading to the resurgence of the idea of contracting external debt. Similarly, following the sharp drop in oil prices in 2015, the Saudi Arabia's external debt (% of GDP) has jumped by more than 150% over three years only, reaching a level of 28.85% in 2020 compared to a 10.62% in 2015 (https://Fred.stlouisfed.org/series/SAUDGDPGDPPT). The positive correlation of weak institutions with inefficiency can lead to fiscal policy procyclicality. Inefficient public spending tends to be procyclical compared to productive public spending (Makin, 2014). This procyclicality is apparent in developing countries, particularly those characterized by corrupted and weak institutional environment (Alesina et al., 2008; Frankel et al., 2013). This is conducive to output fluctuations where booms and busts are exacerbated (Frankel et al., 2013).

Originality/value

Originality of the study resides in the idea that external debt is an important element that could help to explain why oil curse could take place. The transmission mechanism that underpins the oil curse hypothesis is yet to be fully understood. In doing so, the paper, with the use of two sophisticated statistical techniques, reconciles between the concept of debt overhang and oil curse hypothesis. Similar research efforts are scant.

Details

Journal of Economic Studies, vol. 48 no. 4
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 23 November 2010

Haydn Furlonge and Mark Kaiser

With over 100 years of commercial activity, Trinidad and Tobago's energy sector has demonstrated significant growth and dynamism. This paper aims to provide a historical…

Abstract

Purpose

With over 100 years of commercial activity, Trinidad and Tobago's energy sector has demonstrated significant growth and dynamism. This paper aims to provide a historical account of gas sector developments and seeks to decipher the motivating factors and key policy positions of the government.

Design/methodology/approach

A review of policy framing documents in the gas sector is conducted. These are juxtaposed with historical information on hydrocarbon production, level of foreign direct investment and State participation. The impact on the country's economy in terms of energy revenues and gross domestic product (GDP) is also examined.

Findings

Over the period 1962‐2007, daily average hydrocarbon production increased eightfold to 800,000 barrels of oil equivalent due mostly to natural gas. Total energy revenues and GDP have grown significantly. Contributing factors include an evolving fiscal regime to attract foreign investment, strategic State investments, joint venture arrangements, monopoly gas transmission and merchant roles and an effective institutional framework. Government stewardship, market forces and private sector investment moulded the sector. Recent measures include revisions to the fiscal regime and sector diversification aimed at sustaining the industry.

Originality/value

Energy sector developments of this small island economy have largely escaped the purview of the mainstream academic literature. Trinidad and Tobago's energy policy has not been well articulated or documented, and this paper serves to act as a springboard for further studies which may provide policy direction for other countries.

Details

International Journal of Energy Sector Management, vol. 4 no. 4
Type: Research Article
ISSN: 1750-6220

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Article
Publication date: 7 January 2019

Olatunde Julius Otusanya and Sarah G. Lauwo

“Corrupt practices” is a recurring feature of media coverage. The paper seeks to encourage debates about the influence of institutional structures on agency to break away…

Abstract

Purpose

“Corrupt practices” is a recurring feature of media coverage. The paper seeks to encourage debates about the influence of institutional structures on agency to break away from methodological individualism. This paper aims to encourage reflections on the role of both the structures and actors which have shaped the continuous expansion of corrupt practices in Nigeria.

Design/methodology/approach

Whilst recognising that deviant behaviour by some individuals is always possible, this paper has rejected methodological individualism and shows the value of locating anti-social practices within the broader socio-political and historical context. Within a socio-political framework, this study adopts the theories of critical realism, developmental state and globalisation to understand the relationship between social agency and society, focusing upon the institutional structures and the role of social actors.

Findings

The evidence shows that socio-political and economic development, politics, power, history and globalisation have continued to reproduce and transform the institutional structures and actors which have facilitated anti-social practices in Nigeria. The paper concludes that large sums of government revenue have been undermined by the anti-social practices of the Nigerian political and economic elite (both local and international), which have enriched a few, but impoverished most, Nigerians.

Practical implications

As a consequence of recurring corrupt practices in Nigeria, there is a pressing need for reform to curb these practices which have had, and continue to have, a serious effect on Nigeria and its future development.

Originality/value

It provides a framework for understanding and explaining the inter-relations of actors and institutional structures and the linkages and influences that have shaped the practices in Nigeria.

Details

Journal of Financial Crime, vol. 26 no. 1
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 29 April 2014

Olatunde Julius Otusanya

The purpose of the paper is to examine the problem of anti-social financial practices which seems to be a taken-for-granted reality in many parts of the world and…

Abstract

Purpose

The purpose of the paper is to examine the problem of anti-social financial practices which seems to be a taken-for-granted reality in many parts of the world and particularly in developing countries. The paper locates the role of actors within the theory of transformational model of social activity proposed by Bhaskar (1989) and advocates radical reform to minimise attendant problems created by these antisocial financial practices.

Design/methodology/approach

The paper proposed Bhaskar’s (1989) theory of transformational model of social activity which suggests that the society provides the necessary conditions for intentional human activity and that intentional human action is a necessary condition for it. This is because it is difficult to separate people’s perception from the wider social context in which the phenomena arise and the way and manner in which the practices are constructed. To help understand why antisocial financial practices have become so deeply embedded in the Nigerian sociopolitical and economic systems, the views of significant others (professionals, tax officials, non-governmental organisations, media and regulators) were solicited about the structures that influence the activities of the social actor involved in these antisocial financial practices in Nigeria.

Findings

Using results from 24 interviews, the paper argues that social structures, such as globalisation, history, politics and social networks, have influenced and [re]shaped the attitudes and behaviours of actors towards committing antisocial financial practices.

Practical implications

The paper, therefore, advocates a radical reform that could minimise the attendant problems created by these antisocial financial practices of actors and the enabling structures.

Social implications

Where antisocial financial practices are embedded in the society, they become part of the daily routines and in that process are normalised.

Originality/value

The paper is a general review of the literature and evidence on contemporary issues.

Details

Journal of Financial Crime, vol. 21 no. 2
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 29 May 2007

James P. Neelankavil and Debra R. Comer

To derive and apply a new composite performance metric to top performing US companies in order to identify consistently excellent performers and explain their success over…

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Abstract

Purpose

To derive and apply a new composite performance metric to top performing US companies in order to identify consistently excellent performers and explain their success over the last half‐century. The ten firms topping the list for this new composite performance metric represent the “best of the best” of American corporations during the fifty‐one years of Fortune magazine listings.

Design/methodology/approach

Data for this analysis were gleaned from the annual lists of the top 500 companies reported by Fortune from 1954 to 2005. Using Fortune's annual rankings of companies according to the four performance criteria of return on investment/equity, net profits, total assets, and revenues dimensions, the authors firstly computed, for each of these four performance dimensions, an average ranking based on a company's particular rank each year and its total number of appearances during the 51‐year period; and then, secondly, by assigning each of the four performance criteria a weight reflecting its importance, derived a composite (total) score based on a company's average ranking on all four criteria.

Findings

For a modern US based company to be successful year after year it must consistently achieve two of four performance criteria included in the composite metric. The results of the longitudinal analysis illustrate the significance of using a variety of metrics, or a composite metric, to gauge corporate performance.

Research limitations/implications

The limitations of the findings are that assigning different weights to the four performance criteria would yield a somewhat different composite ranking.

Originality/value

This paper is the first to derive and present a composite performance metric, compiled from Fortune's annual rankings of four critical performance variables and representing an aggregated weighted ranking of American companies over a half‐century.

Details

Journal of Management Development, vol. 26 no. 5
Type: Research Article
ISSN: 0262-1711

Keywords

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Article
Publication date: 10 October 2016

Fernando Antonio Slaibe Postali

The purpose of this paper is to investigate whether Brazilian municipalities are losing efficiency when collecting local taxes in response to oil windfalls. In particular…

Abstract

Purpose

The purpose of this paper is to investigate whether Brazilian municipalities are losing efficiency when collecting local taxes in response to oil windfalls. In particular, the paper aims to analyze the hypothesis that these grants encourage the benefiting municipalities to collect taxes with excessive administrative costs.

Design/methodology/approach

The author estimate a stochastic cost frontier with fixed effects and investigate whether oil revenues impact on the efficiency scores.

Findings

The results reveal that the municipalities benefitting from oil revenues (royalties) reduce their efficiency in collecting taxes in response to such grants, which signals that they generate some type of X-inefficiency in municipal public management.

Research limitations/implications

The stochastic cost frontier requires the calculation of input prices for public sector.

Originality/value

Using a cost frontier, it is possible to avoid the problem of mixing technical efficiency with unobservable preferences on public goods, as well as to focus on economic efficiency instead of technical one.

Details

Journal of Economic Studies, vol. 43 no. 5
Type: Research Article
ISSN: 0144-3585

Keywords

Abstract

Details

Monetary Policy, Islamic Finance, and Islamic Corporate Governance: An International Overview
Type: Book
ISBN: 978-1-80043-786-9

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Executive summary
Publication date: 6 March 2020

GUYANA: Oil windfall increases election uncertainty

Details

DOI: 10.1108/OXAN-ES251156

ISSN: 2633-304X

Keywords

Geographic
Topical
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