Alternatives to Local Content

This analysis of local content combines the conceptual and theoretical analysis with a qualitative empirical analysis. A comprehensive treatment is provided of the effects of local content, incorporating insights from the political economy literature on effects of natural resource rents. The theoretical framework has implications for the approach chosen in empirical studies of local content; since local content entails the use of scarce revenues with alternative uses outside the petroleum sector, empirical studies should not narrowly focus on views of groups involved or with vested interests in the sector, and avoid being constrained by discourses treating local content as a sector management problem without opportunity costs. The qualitative data from Tanzania provides an illustration of the views that emerge when the local content question is opened up in this way. It also provides new information on the dynamics of local content debates in a country with recently discovered resource wealth, including the underlying factors shaping the debates and policy processes. The findings suggest that the arguments presented in this paper are mirrored by concerns among informed individuals in Tanzania, and that the interests and strategies of the political and economic elite may make it difficult to reposition the debate and policy processes on local content. It is stressed in this document that the theoretical and qualitative analysis can only provide reasoned arguments and hypotheses on the preconditions and effects of local content policies, more explicit testing would require a different and more quantitative approach. Unfortunately, the lack of quantitative data remains a major challenge for research on local content.