Designated Principals in Brazil and Norway

Abstract

Abstract A comparison of Brazil and Norway reveals that democracy can be compatible with state capitalism, as well as successful NOCs. Resource scarcity and government encouragement had played a vital role in pushing Petrobras (during the oil crises of the 1970s) and Statoil (beginning in 1988) to invest in assets abroad. However, Brazil and Norway had an early start, as many NOCs would not begin investing abroad until the late 1990s. By this period, Brazil and Norway had already established a set of governance institutions to rein in potentially counterproductive NOC behavior. Most important among them were powerful ministries that had a prerogative in energy, as well as competent regulatory agencies whose specialization allowed them to cooperate with the ministries and NOCs. These institutions were not created in a vacuum, but emerged from major legislative acts that followed often contentious democratic deliberations surrounding how to best manage their resource endowment.