The effect of "Local Content" Policy on the Growth of Iranian Industrial Enterprises (Case Study: Oil and Gas Projects)

Document Type : Original Article

Authors

1 Ph.D. Candidate, Department of Economics, Faculty of Strategic Management, Supreme National Defense University, Tehran, Iran.

2 Associated Professor, Department of Business Economics, Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran.

3 Professor, Department of Management, Faculty of Industrial Engineering and Management, Malek Ashtar University of Technology, Tehran, Iran.

4 Ph.D., Department of Economics, Faculty of Management and Economics, Islamic Azad University, Science and Research Branch, Tehran, Iran.

Abstract

Resource rich countries, especially those with large oil and gas reserves, are constantly seeking to increase their market share through adopting various policies that optimize and/or expand production. “Local Content Policies” are primarily enacted through government interventions with the long-term goal of increasing the share of employment, or sales, in each of the value chain segments within the host country. Therefore, effective economic planning for this purpose is contingent upon the utilization of proper econometric tools for the quantitative evaluation of policies enacted. This study examines the effects of implementation of “Local Content Policies” on the growth of select industrial enterprises, during the years 1996 to 2022. The paper considers the percentage of projects assigned to domestic contractors in 14 South Pars gas field projects as the variable for “Local Content Policy”. Moreover, using econometric methods and, panel data the paper examines the data regarding sales, employed manpower and capital of the 42 companies participating at various stages of projects.
The results obtained showed that the implementation of this policy has had a significant and positive effect on the growth of Iranian industrial enterprises. However, this effect has not been uniformed across various fields.

Keywords

References

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Journal of Defense Economics and Sustainable Development
Volume 9, Issue 32
September 2024
Pages 113-134

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