Calculating investment potential in South America

Taxes and licensing provisions typically increase overall costs for private investors, and therefore impede private investment. In addition, the design and structure of tax systems in each country affect the extent to which financial risks are borne by private investors, rather than by the host government. Tax systems that increase perceived financial risks stemming from unpredictable oil prices, development costs and physical characteristics of undiscovered or undeveloped oil fields raise further impediments to private investment. This analysis focuses on both aspects of the investment climate--risk and return--and the way that investment incentives within three South American countries are influenced by tax and licensing regimes