Oil, Local Content Laws and Paternalism: Is Economic Paternalism Better Old, New or Democratic?

Abstract

Although paternalism has long been studied, the ‘new paternalism’ has received relatively little attention, and much less attention in the oil and gas industry where interferences into preferences centre more strongly on the supply, rather than on the demand, side. The ‘choice architects’ in Ghana have succeeded in nudging local businesses to go into the provision of services for the oil industry and the supply of goods and services needed in the petroleum sector. Yet, the new paternalism in the petroleum industry has had major limitations too, including re-enforcing systemic inequality and labour exploitation, while paying scant attention to the destruction of local content. These problems can only be addressed through systemic redistribution, structural transformation of the economy, comprehensive social protection and deliberate interventions for ecological sustainability. In this process of social change, an embrace of old paternalism will not do neither will asserting a new paternalism as the philosophy behind local content laws and policies. A philosophy and praxis of democratic paternalism provide a surer path for more effective transformation.

Keywords:

• oil
• Africa
• paternalism
• nudge
• local content

Acknowledgements

I am grateful to Dr Stefan Mann and two anonymous reviewers for helpful comments on initial drafts of the manuscript.

Notes

¹ In the report, the strategy is called ‘Domestic content requirements’ (World Bank, 1993, pp. 97, 140) or ‘domestic content rules’ (World Bank, p. 359).