Government Intervention in the Venezuelan Petroleum Industry: An Empirical Investigation of Political Risk
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Two important aspects of political risk analysis that have not received much attention in the literature are (a) the reasons why multinational firms experience different types of intervention, and (b) the timing of intervention. In order to address these issues, this research develops a conceptual model of political risk based on the premise that host government intervention is related to specific objectives of the government vis-à-vis multinational firms. Information reflecting the attainment of objectives motivates the government to intervene in a given manner. The application of this model to the case of the Venezuelan petroleum industry from years 1947 to 1976 provides some support for this model and gives insight into the timing of specific types of intervention.
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