Abstract:
Nationalization is a particular type of organizational structure where the state or nation controls
the industry as opposed to private companies or multinational organizations. If one imagines a
continuum of organizational structure, nationalization and privatization would be at opposite
ends. Nationalization could include joint ventures where the state controls the industry but
allows for private companies to participate in the resource extraction and retain some of the
profit. Within the past few years, Venezuela and Bolivia have announced plans to renationalize
their oil and natural gas industry.
The first part of this project seeks to perform a qualitative analysis to discern the common
characteristics of a nationalized country focusing specifically on four countries – Bolivia,
Venezuela, Mexico and Nigeria. There are various components influencing the efficiency of a
nationalized industry including civil society, regionalism, and reliance on oil. The main findings
were that a nationalized country with a high reliance on oil or natural gas and weak financial
institutions will have an authoritarian form of government, and that there will likely be more
incidences of Latin American countries nationalizing in the near future if oil prices remain high.
The project also performs a quantitative analysis on indirect measures of efficiency using
subsidies and also analyzes the effect of nationalization on social development using the Gini
coefficient (a measure of income equality) and public spending on education. Nationalization is
found to have a positive effect on income equality and a negative effect on public spending on
education.
The project culminates with policy recommendations specifically focused on the four selected
countries with implications for broader applications. The main objectives of the
recommendations are to strengthen financial institutions, diversify the economy, and increase
transparency and accountability of the industry.
