Law and policy frameworks for local content in the development of petroleum resources: Norwegian and Australian perspectives on cross-sectoral linkages and economic diversification

The establishment of cross-sectoral linkages is vital to ensure economic diversification of an economy where natural resource production dominates. This paper examines the use of legal instruments in implementing economic diversification. It focuses on the use of policy, statute, and conditions attached to the grant of petroleum licenses by the State as legal tools to achieve economic diversification. Examining Norwegian economic diversification in the period 1970–1994, this paper concludes that the use of consistent and decisive government policy of building Norwegian industrial competency, implemented through statutes and licensing conditions, has successfully established cross-sectoral linkages built on the principles of economic diversification. Conversely, Australia has left economic diversification to market forces, which has resulted in minimal cross-sectoral linkages, and a decline in the industrial sector. Where government intervention has occurred, such as in the development of the Australian Marine Complex in Western Australia, successful cross-sectoral linkages have been developed.