Public and Private Firms in Natural Resource Industry: Comparing the Development of the Lithium Industry in South America

Literature on public and private firms has traditionally focused on the efficiency effects of differing firm ownership, although the literature has been largely dormant since the 1980s. State-led development models in Asia and Latin America warrant continued analysis of this fundamental issue in International Political Economy. This paper attempts to frame debate on natural resource governance by identifying the factors that affect the mix of public and private firms in extractive industry. Historical institutionalism is used as a framework for analyzing policy change, and political economy theory of governance institutions is compared to the traditional economic theory of the firm. Analyzing the lithium industry in Chile and Bolivia as a case study, this paper suggests that temporal factors like historical stability of economic modeling and the sustained protection of property rights are critical in determining the optimum mix of public and private firms. This paper synthesizes existing scholarly contributions with original fieldwork gathered in the region.