Policy-makers in many oil and gas producing countries have considered local content policies to be an attractive option to enhance the externalities of the petroleum sector beyond the fiscal rent generated by raw material exports. This chapter investigates the extent to which local content requirements (LCRs) have contributed to overall sustainable development in oil and gas producing countries in Latin America. To do so, it examines local content frameworks and their outcomes in six countries in the region.

We identify four key factors for the successful design and implementation of local content policies: (i) the role of specificity of local content frameworks; (ii) the role of national oil companies;(iii) the role of capability building programmes and opportunities for learning by doing for long-run competitiveness; (iv) and the role of regional cooperation to foster industrial complementarities and maximise economies of scale.

A strategic national and regional approach to local content policies is thus needed to gradually increase the capabilities and competitiveness of local suppliers in the long run. This chapter provides policymakers in Latin America, and elsewhere, with insights and perspectives on how local content strategies can be improved to promote sustainable development and diversification further.