2.3 International Banks and Their Impact on the O&G Industry
23
Fig. 2.2 O&G Upstream and Midstream activities and poverty reduction in host countries (Source:
Information compiled from Pegg [2006, pp. 380, 381], Taranaki [2011], and WBG [2004])
As Fig. 2.2 illustrates, the World Bank Group argues that the petroleum revenue
generated by international O&G companies in resource-rich countries diminishes
poverty locally if companies and/or governments voluntarily allocate part of their
revenue to social investment programmes that target poverty alleviation and human
development.
The World Bank Group also supports the notion that Extractive industries are
“knowledge industries” (Pegg, 2006, p. 281) because they introduce advanced technological systems that increase the productive capacity of local people and expand
economic opportunities locally, hindering local rates of poverty. An example is
Norway which has been quite successful in developing domestically based industrial
competence in connection with Upstream O&G activities (Heum, 2008).
O&G supporters also argue that the O&G revenue that goes into local content policies and practices also facilitate social development (Ablo, 2015). Local content policies refer to “policies imposed by governments that require firms to use domesticallymanufactured goods or domestically-supplied services in order to operate in an economy” (OECD, n.d.). A dominant understanding is that local content policy work as “a
mechanism through which the benefits of a country’s endowed resources on economic
development could be increased and also for trickling the wealth generated to the
country’s people” (Adedeji, Sidique, Rahman, & Law, 2016, p. 61).
In Ghana, O&G local content policies have galvanised engagement between
local entrepreneurs, government officials and international oil companies, providing
medium to large-scale Ghanaian enterprises with an entry point (Ablo, 2015). On
the other hand, according to Ablo (2015), local content policies in Ghana has not yet
been able to benefit small Ghanian enterprises.
23
Fig. 2.2 O&G Upstream and Midstream activities and poverty reduction in host countries (Source:
Information compiled from Pegg [2006, pp. 380, 381], Taranaki [2011], and WBG [2004])
As Fig. 2.2 illustrates, the World Bank Group argues that the petroleum revenue
generated by international O&G companies in resource-rich countries diminishes
poverty locally if companies and/or governments voluntarily allocate part of their
revenue to social investment programmes that target poverty alleviation and human
development.
The World Bank Group also supports the notion that Extractive industries are
“knowledge industries” (Pegg, 2006, p. 281) because they introduce advanced technological systems that increase the productive capacity of local people and expand
economic opportunities locally, hindering local rates of poverty. An example is
Norway which has been quite successful in developing domestically based industrial
competence in connection with Upstream O&G activities (Heum, 2008).
O&G supporters also argue that the O&G revenue that goes into local content policies and practices also facilitate social development (Ablo, 2015). Local content policies refer to “policies imposed by governments that require firms to use domesticallymanufactured goods or domestically-supplied services in order to operate in an economy” (OECD, n.d.). A dominant understanding is that local content policy work as “a
mechanism through which the benefits of a country’s endowed resources on economic
development could be increased and also for trickling the wealth generated to the
country’s people” (Adedeji, Sidique, Rahman, & Law, 2016, p. 61).
In Ghana, O&G local content policies have galvanised engagement between
local entrepreneurs, government officials and international oil companies, providing
medium to large-scale Ghanaian enterprises with an entry point (Ablo, 2015). On
the other hand, according to Ablo (2015), local content policies in Ghana has not yet
been able to benefit small Ghanian enterprises.