JV

economic-dictionary

A joint venture is one that is not completely private or public. Thus, part of its financing is provided by the State.

We found a joint venture business in Ecuador in the oil sector, during the government of Rafael Correa. As the country does not have its own infrastructure or machinery, and without being able to develop intellectual capital to carry out operations and maintenance, the exploitation of crude oil is ceded to Chinese companies.

The Ecuadorian government only counts the production of barrels of oil and therefore charges a quota agreed with Chinese companies. Ultimately, in this cross-border business, the public sector and the private sector intervene.

How to govern a joint venture?

Joint ventures are not easily governable, since they oppose public interests, such as social elements and fundamental rights, with private interests, such as maximizing the company's profits.

Therefore, the legal instrumentation of the mixed company or joint venture is necessary, through association agreements or satellite contracts, well-defined statutes, essential agreements on capital and contribution, management bodies, management rules and regulations, and organization, financial policy, technology transfer, appearance of arbitration bodies and applicable law, etc.

In other words, the existence of a regulatory framework where the governing bodies of the joint venture can be supported is of necessary importance, in order to improve its efficiency and solve possible conflicts of interest that may arise, both in the public sphere. as in the private sphere.

Mixed economy

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