Government Ownership Versus Regulation of Mining Enterprises in Less-developed Countries

Less-developed government equity in mining projects has become increasingly popular, both in academic literature and in practice. Despite this, it has received surprisingly little scrutiny: this paper analyses the reasons for LDC governments taking equity in mineral projects and discusses whether equity is the most appropriate means of achieving these objectives. It concludes that equity has few unique advantages over taxation and other government powers of regulation in achieving the diverse objectives of government. It further concludes that the advantage to a government of equity participation will probably increase with the degree of development of the economy.