Understanding resource nationalism: economic dynamics and political institutions

Abstract

Resource nationalism is on the rise around the globe. During the recent global resource boom, many governments have adopted nationalistic policies to maximise the political and economic benefits from their mining and energy sectors. Existing theories of resource nationalism rely upon economistic bargaining models, which fail to interrogate how political processes shape governments’ resource policy strategies. This article extends and develops these bargaining models by theorising the role of political institutions – specifically those found in rentier, developing and liberal market economies – in determining patterns of resource nationalism. A survey of 12 major resource-producing countries reveals that contemporary resource nationalism takes a range of distinct forms, which are connected to differences in political institutions that structure the objectives and policies of governments. It is therefore argued that while economic dynamics function as an enabling factor, political institutions are an equally important conditioning factor shaping the distinctive forms of resource nationalism observed today.

Keywords:

• resource nationalism
• economic nationalism
• natural resources
• mining
• energy
• rentier state

Acknowledgements

I would like to thank Mark Beeson, Kelly Gerard, Pascale Hatcher, Kanishka Jayasuriya, Anita John, Anthony Payne, Garry Rodan, Jojo Nem Singh and several anonymous reviewers for comments on the prior versions of this paper.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. For a discussion on the distinction between developmental and neopatrimonial (rentier state) political institutions, see Hout (2007, pp. 1334–1335).

2. See WTO (various years). While Bahrain and Oman are not members of OPEC, they each maintain state trading arrangements for oil and gas exports.

3. At the time of writing (November 2014), the new Brazilian mining code (Bill No. 990) is under debate in the National Congress. Its principal feature is an approximate doubling of mining royalties (Wall Street Journal, 2013).

4. An exception is US controls on the export of crude oil and natural gas, which were imposed during the second oil crisis of 1979. However, as a net energy importer, these controls have fallen into disuse, and no applications to export energy have been rejected by the US government in recent years (Lincicome, 2013).

5. In September 2014, the Minerals Rent Resource Tax was repealed by the Australian government (Ernst & Young, various years-b). However, recent provincial royalty increases remain in place.

6. The sole exception is the GCC, which has not increased resource nationalism during the recent boom. This may be explained by the fact that the GCC already had extremely high levels of resource nationalism prior to 2004, leaving little scope to extend the strategy further.

7. Author's calculations, from IMF (2014).

8. Australia, Brazil, China, India and Russia. Author's compilation, from Ernst & Young (various years-b).