Healing the Breach Over Foreign Resource Exploitation

Mikesell, R.F.
March 1967
Columbia Journal of World Business;Mar/Apr67, Vol. 2 Issue 2, p25
Academic Journal
Despite threats and rumors of nationalization, most of the petroleum and minerals output of the developing countries is still produced by foreign-headquartered international companies. Like it or not, the governments of these countries realize that for one reason or another they still need the services of these enterprises to explore, develop and market their resources. The companies operate under a variety of arrangements. The standard arrangement has been for a foreign company to acquire a concession giving it exclusive rights to explore in a particular area and to develop and produce the minerals or petroleum found in that area for a stated number of years. It pays the state royalties on the materials extracted and income taxes on the net earnings from its operations. While the developed countries have a large stake in the production of petroleum and minerals in the developing countries, both as consumers and investors, the importance of these industries to the producing countries is far greater. Exports of minerals and fuels constitute nearly 40% of the value of all exports of the developing countries and some countries are almost entirely dependent upon one or more of these commodities for their foreign exchange earnings.


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