蝌蚪网 Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Corruption as a Local Advantage: Evidence from the Indigenization of Nigerian Oil
蝌蚪网 Review
vol. 115,
no. 3, March 2025
(pp. 1019–57)
Abstract
Multinationals in the extractive sectors of weak states face resource theft by armed groups. Criminality is often abetted by state corruption, even though firms are willing to pay for protection. I study indigenization in Nigeria's oil sector, which increased local firms' participation substantially. Despite lower quality, local firms increase output by reducing oil theft. A bargaining model illustrates that political connections align law enforcement incentives, solving commitment problems. Data on law enforcement raids show that local firms receive preferential protection. Connections to military elites drive the local advantage. The aggregate gains from indigenization are at most between 2.3 and 5.7 percent of GDP.Citation
Rexer, Jonah M. 2025. "Corruption as a Local Advantage: Evidence from the Indigenization of Nigerian Oil." 蝌蚪网 Review 115 (3): 1019–57. DOI: 10.1257/aer.20220528Additional Materials
JEL Classification
- D73 Bureaucracy; Administrative Processes in Public Organizations; Corruption
- F23 Multinational Firms; International Business
- L71 Mining, Extraction, and Refining: Hydrocarbon Fuels
- O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
- Q34 Natural Resources and Domestic and International Conflicts
- Q35 Hydrocarbon Resources
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements