Mediating effects of indigenous oil firms’ participation and backward linkages on the relationship between local content policy and job creation: Insight from Nigeria

Abdulkabir N Adedeji,Shaufique F Sidique,Siong H Law,Azmawani Abd Rahman,Farhad Taghizadeh-Hesary

doi:10.1080/23311975.2018.1515576

Abdulkabir N Adedeji, Shaufique F Sidique + Show 3 more

Open Access

https://doi.org/10.1080/23311975.2018.1515576

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Abstract

The increase in indigenous oil firms’ participation (IOFP) and backward linkages through which additional jobs could be created was the main target of the local content policy (LC policy) implement...

Highlights

A number of established oil and gas producing countries have adopted or are considering the adoption of policies that can capitalize on the extraction of their non-renewable resources to enhance the development of their local economies
Hypotheses and method Based on the existing literature, we developed a structural model (Figure 1) to test indirect effects of the LC policy on job creation through indigenous oil firms’ participation (IOFP) and backward linkages (LINK)
The possible effect, measured on global value chains (GVCs) often expected for the adoption of LC policy instruments in the oil sector, is based on the conception that the policy has potential in influencing firms’ participation and developing backward linkages towards local economic development (United Nations Economic Commission for Africa (UNECA), 2015), especially in terms of employment generation for locals. This implies that the participation of firms and backward linkages’ promotion in the oil and gas sector could be enhanced if the LC policy is effective

Summary

Introduction

A number of established oil and gas producing countries have adopted or are considering the adoption of policies that can capitalize on the extraction of their non-renewable resources to enhance the development of their local economies. The LC policy goals remained the same in Nigeria when the policy was introduced in its oil and gas sector in 2001. As imitated from some oil-dependent economies, such as Norway and Venezuela, the primary target of the policy is to increase participation of indigenous oil firms in business activities in the oil sector. An increase in indigenous oil firms’ participation in the sector’s business activities is a way of creating more job opportunities for the local workforce within the industry.

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