Local Content Policy and Modernisation

DOI: 10.20542/0131-2227-2017-61-1-67-77

V. Kondrat’ev (v.b.kondr@imemo.ru),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation 


A local content requirement (LCRs) is a widely acknowledge protective device with two simple but powerful objectives: create jobs at home rather than abroad and channel business to home firms rather that foreign firms. Historically, local content requirements have been associated primarily with government procurements and mandates imposed on publicly funded projects. Political leaders who advocate local content policy often distinguish multiple objectives. Many of recent local content requirements identified in this article were inspired by three basic related factors. First, since the onset of the Great Recession foremost they wanted to create jobs and channel business to domestic companies. Second, they may have aspirations of building a world class industry, following the logic of infant industry analysis. Third, they believe that local content policy offers a promising path to long-term economic development. Classic local content requirements give bid preferences to local supplies (e.g., 25 percent on a construction project or a narrowly defined category of goods such as military uniform) at least have the benefit of transparency. The cost of such local content requirements can be easily calculated, their administration is relatively simple? And they are not prone to corruption. Much more common are quantitative restrictions and guidelines. They are highly objectionable both on economic and political grounds. From economic standpoint their cost is highly variable depending both on underlying supply and demand conditions and on administrative factor. The same characteristics make local content requirements highly attractive to their supporters. The costs are off-budget and can be dismissed in political debate. The benefits in terms of new jobs and new industries are easily achieved and whether large or small they are immediate. The payoffs come fast as foreign supplies are excluded from the market.


local content requirements, government procurement, economic growth, building new industries, new jobs creation, domestic business activity 


1. Many Oil Experts Unconcerned Over China Unocal Bid. The Washington Post, July 1, 2005. Available at: http://www.washingtonpost.com/wp-dyn/content/article/2005/06/30/AR2005063002081.html (accessed 16.02.2016).

2. BHP Billiton Walks away from PotashCorp. CBC News, 15.11.2014.

3. Hufbauer G., Schott J., Vieiro M., Wada E. Local Content Requirements: A Global Problem. Washington, Peterson Institute of International Economics, 2013. 212 p.

4. Oliveira E. Overview of the Brazilian Industrial Health Complex. Brasilia, Brazilian Ministry of Health, 11.04.2011.

5. Botello J., Dedrick J., Kraemer K., Tigre P. From Industry Protection to Industry Promotion: IT Policy in Brasil. Irvine, University of California Center for Research on Information Technology and Organization, 1999. Available at: http://www.crito.u-ci.edu/publications/pdf-ppt/brazil-case-10-99.pdf (accessed 16.02.2016).

6. JETRO. Medical Device Market in Brazil and Its Regulation. Available at: https://www.jetro.go.jp/ext_images/brazil/topics/20140806962-topics/Sessao5-1_Goulart.pdf (accessed 16.02.2016).

7. New Record in Worldwide Wind Installation. World Wind Energy Association, Press Release Statistics, February 5, 2015. Available at: http://www.wwindea.org/new-record-in-worldwide-wind-installations (accessed 24.02.2016).

8. Statista Premium Account. Available at: http://www.statista.com/statistics/263492/electricity-prices-in-selected-countries (accessed 25.02.2016).

9. Powering Canada’s Future. Canadian Wind Energy Association. WINDVISION2025, July 2014. Available at: http://canwea.ca/wp-content/uploads/2014/05/Canada-Current-Installed-Capacity_e.pdf (accessed 24.02.2016).

10. Feed-in Tariff Program. Ontario Power Authority, August 10, 2012. Available at: http://fit.powerauthority.on.ca/newsroom/august‑10-2012-final-fit‑20-program-documents-posted (accessed 24.02.2016).

11. Ontario to Defend Local Content Rules that Have Brought $30B in Investment. The London Free Press, 19.11.2012.

12. Wind Energy Law in Canada. Gowlings, 2010. 64 p.

13. Using Energy to Build the Quebec of Tomorrow: Quebec Energy Strategy. Government of Quebec, Ministry of Natural Resources and Wildlife, 2006. 16 p.

14. Nigerian Oil and Gas Industry Content Development Act. 2010. 37 p. Available at: http://www.eisourcebook.org/cms/January%202016/Nigerian%20Oil%20and%20Gas%20Industry%20Content%20Development%20Act%202010.pdf (accessed 25.02.2016).

15. NNPC/Mobil JV Completes Fabrication of Platforms for New Offshore Operations. The Engineering Network, March 18, 2012. Available at: http://go.engineer-ng.net/forum/topics/nnpc-mobil-jv-completes-fabrication-of-platforms-for-new-offshore (accessed 25.02.2016).

16. Copland C., Levine L., Mallet W. The Role of Public Works Infrastructure in Economic Recovery. Congressional Research Service Report for Congress, September 21, 2011. Available at: https://www.fas.org/sgp/crs/misc/R42018.pdf (accessed 25.02.2016).

Registered in system SCIENCE INDEX

For citation:
Kondratev V. Local Content Policy and Modernisation. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2017, vol. 61, No 1, pp. 67-77. https://doi.org/10.20542/0131-2227-2017-61-1-67-77

Comments (0)

No comments

Add comment

Current Issue
2020, vol. 64, No. 3
Topical Themes of the Issue:

  • World Economy and Energy at the Turn: Search for an Alternative Development Model
  • Stop or Deadlock? The U.S. Elites about the INF Crisis
  • Social Base and Prospects of Populism in Western Countries
  • The Crisis of the Union State of Belarus and Russia
View This Issue (2020, vol. 64, No. 3)
Send article

Dear readers!
Please note that free access to full-text issues of the Journal is being opened at our WEB-site after 6 months of the date of publications. Currently, the releases of 2015–2018 are available for free. The work on deepening the open archive of full-text issues will be continued.

Dear readers!
This is to inform the researchers of the Institute of World Economy and International Relations that electronic version of the 4-nd issue of 2019 of French magazine Politique étrangère is now available. Those who are interested, please personally address to the editorial staff of MEMO Journal (room 18-17) with an electronic media (e-mailing is not possible because of technical reasons).


In response to the challenges of our time the Editorial board continues to open new thematic rubrics:

“The Common Spaces”. The XX century was marked by the process of active development of the so-called common spaces, namely the World ocean, outer space and the Internet which, due to various reasons, were previously perceived as peripheral for the mankind and were not used at all or less intensively. Since then, the degree of their development and usage is constantly increasing. Even though the prospects of obtaining material dividends from their use are often extremely remote, the level of competition there is steadily increasing, resulting in growing inter-state conflicts’ potential.

“Silk Road and prospects of Great Eurasia”. It is planned to publish materials concerning the Chinese project of Silk Road and its impact on the socio-economic development of various countries in Eurasia and the integration processes in this mega-region.

“Africa today and tomorrow”The rubric devoted to contemporary issues of Africa which is attracting growing interest of the world's leading actors. We plan to publish the articles analyzing the status of statehood, socio-economic and political development of the countries of Black continent, as well as the integration processes between them.

“Civilization processes of modern development” is a new rubric opened by MEMO Journal in 2020. It will be devoted to the analysis of the influence of civilizational factors and inter-civilizational interactions on the political and socio-economic development of the world at whole, regions and countries.

Dear colleagues, authors and readers!

We kindly request you to turn to editor-in-chief and executive secretary directly concerning reviewing scientific publications in our journal. Only editor-in-chief takes decision on order and publication the reviews!


"World Eonomy and International Relations" announces a contest for the best joint academic publications of domestic and foreign researchers and experts in topical issues of the world economy and international relations. The winners will be selected according to the results of peer reviewing and discussion at the Editorial Board. The articles will be published in priority order.


The print version of “World Economy and International Relations” journal is distributed by advance subscription only, and is not offered for retail sale. To subscribe please address to any post office in Russia by referring to the Federal Postal Service Union Catalogue, section “ARSMI”, the journal index is 70542. The subscription may be made for the whole subscription period or starting from any nearest available month for desired number of issues.

To purchase the full-text electronic version of the journal’s issue/article please address to the WEB portal of Scientific electronic library eLIBRARY.ru or URL: https://press.gaugn.ru/.

In journal
                     Full Archive
                     Articles by year
                     Authors by year
2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | 1997 |

The author’s opinions may not coincide with the position of editorial