Local content in the Latin American oil sector: State, regulations or free entry?

Latin America is rich of natural resources and has lately led to a nearly two digit annual growth rates due to increased demand and rising prices on the world market. However, local competence to extract and process the natural resources ares still missin g. We will compare three different Latin American strategies on local content to understand the effects on development of local know-how and industrial development, as well as growth and poverty reduction in general. State companies: The more radical sid e headed by President Chavez's Venezuela partially nationalized the natural resource sector and through the dominance of state owned entities, a policy followed by Ecuador and Bolivia. Argentina has lately nationalized YPF, the local arm of Spanish Repsol oil group. However, these countries also invite international companies to take part in the exploration in joint ventures controlled by the state companies. It is however questionable whether rather passive international partners are willing to transfer know-how and technology. Local content requirement: Brazil combines state capitalism through Petrobras and local content requirement in the supply industry. LC is required in the law, but formally independent state agency (ANP) decide the level by type of activity (today 55 - 85 percent of the total value). The idea is force actors within the industry, foreign or national, to develop a Brazilian service sector through transfer of technology, know-how, organisation and education of local employees. Un conditional entry: Colombia put no formal requirement on national ownership or origin of services in the oil sector. The main interest is to increase production and related taxes, with expected secondary positive on all economic sectors.