The economic drivers of the political will for social responsibility in energy policy for fossil fuel exporting countries

Abstract

The essence of this chapter is to ascertain the relative importance of domestic and global economic factors when explaining that country’s political will to implement policies of social responsibility in fossil fuel exports. Political risk ratings from both developed and developing countries, which export fossil fuels, are treated endogenously. The ratings are hypothetically treated as dependent on global oil and global benchmark and domestic stock market prices. The test results are compared. Evidence is produced, contrary to theory on pure political risk, that domestic and global economic factors do affect political risk (and thus the political will associated with social responsibility) with greater strength in developed countries and with greater strength for all countries in the post global financial crisis (GFC) period. In the cases of primarily developed countries, the increase in wealth from exports have reduced political risk and perhaps created the circumstances where policies of social responsibility are affordable and where such policy implementations are on government agendas.