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PaperclipPerfector  3mo ago (text post)   1369 thread views

Transnational Thursday for August 8, 2024

Transnational Thursday is a thread for people to discuss international news, foreign policy or international relations history. Feel free as well to drop in with coverage of countries you’re interested in, talk about ongoing dynamics like the wars in Israel or Ukraine, or even just whatever you’re reading.

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One important element to consider are large corporations that already occupy a market. If your Amazon or similar have a monopoly on a developing country's industry, that country can't really build its own industry in the same niche. At least not without very savvy government influence, as can be seen in Norway's hydroelectric power production. If you want to learn more about this fascinating topic, here's a pretty good summary.

TL;DR: Foreign corporations could build and operate dams on Norwegian territory but they had to use a significant percentage of Norwegian workers as part of their workforce and they would only own those dams for 60-80 years. Thus Norway got both the eventual ownership of the dams and a skilled workforce who knew how to operate them.

These are the kinds of clever tactics it would take to truly catch up to western GDP per capita. So you'd need competent leaders, a loyal population with homogeneous culture and belief in its leadership and even then, it'd still take many decades for any kind of noticeable progress to be made.

Natural resources are another obvious advantage but they can either be a boon or a curse. You have countries like Oman where a brilliant dictator guided his nation into modern times but you also have countless examples of oil wealth leading to corruption and a slow descent into poverty and misery for the citizens.

Thus Norway got both the eventual ownership of the dams and a skilled workforce who knew how to operate them.

If a low IQ country tried to copy this policy, most likely it'd have been unsuccessful and people said '$countryname$ tried too hard with its protectionism, protectionism bad

but you also have countless examples of oil wealth leading to corruption and a slow descent into poverty and misery for the citizens.

Resources are never a curse. These examples almost certainly would have been even worse without oil, just not as notable ones.

Saudi Arabia apparently did something similar with their foreign-investment oil company, although they bought it out rather than force a contractual handover.

Instead, the Sauds executed a patient, and most importantly, amicable assertion of power over Aramco, which did not become fully owned by Saudis until 1974. At the very start of Aramco, the company was entirely owned and operated by Americans aside from menial labor. However, the Saudi government inserted a clause into their contract with the corporation requiring the American oil men to train Saudi citizens for management and engineering jobs. The Americans held up their end of the bargain, and over time, more and more Saudis took over management and technical positions. This steadily increased the bargaining power of the Saudi government, which periodically renegotiated its contract with the Americans over decades to get a greater share of the profits in exchange for more oil exploration or diplomatic concessions.

In 1973 and 1974, the Saudi government authorized two big final buy-outs of Aramco. The prices were not disclosed publicly, but the consensus is that the American oil companies were well-compensated, and that’s after they had made enormous profits for 30 years. This left the oil companies on good terms with the Saudis who were happy to employ them as consultants and specialists. Today, 80% of Aramco’s employees are Saudi, as well as all executives, though surprisingly not all board members.

(From https://mattlakeman.org/2022/11/22/notes-on-saudi-arabia/)

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