Local content in emerging growth poles: Local effects of multinational corporations’ use of contract strategies

ABSTRACT

The article analyses ‘local content’ in the strategies of multinational corporations (MNCs). Local content is explored as a link between MNCs and growth poles emerging through contract systems that encourage regional firms to connect with global networks entering a region. With a theoretical starting point in literature on local content and growth pole development, the analysis contributes to developing theories of growth poles by adding novel elements such as MNCs’ procurement strategies and their influence on growth poles through local content in contracts. Three aspects of MNCs’ contracts able to secure local content and thus increase contributions from extraction projects to regional development processes are analysed: (1) whether and how MNC projects are divided into subcontract modules, (2) the position and use of framework contracts, and (3) how transportation costs to sites are included in the biddings. It is concluded that further research on MNCs and local content would need to be aware of the following: factors that facilitate or maintain discrimination between bidders included and not included in global networks; reasons why advantages of geographical proximity are underexposed; and how public authorities (states) establish rules that give equality to local enterprises in their competition with firms entering from outside.

EDITORS:

• Michael Jones
• Catriona Turner

KEYWORDS:

• contract strategies
• emerging growth poles
• local content
• multinational corporations
• oil and gas industry

Acknowledgements

The Research Council of Norway (PETROSAM2 programme, Grant no. 233726) contributed funding for the preparation of the article.