Winning the Oil Lottery : The Impact of Natural Resource Extraction on Growth

Author/Editor:

Tiago Cavalcanti ; Daniel Da Mata ; Frederik G Toscani

Publication Date:

March 14, 2016

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper provides evidence of the causal impact of oil discoveries on development. Novel data on the drilling of 20,000 oil wells in Brazil allows us to exploit a quasi-experiment: Municipalities where oil was discovered constitute the treatment group, while municipalities with drilling but no discovery are the control group. The results show that oil discoveries significantly increase per capita GDP and urbanization. We find positive spillovers to non-oil sectors, specifically, an increase in services GDP which stems from higher output per worker. The results are consistent with greater local demand for non-tradable services driven by highly paid oil workers.

Series:

Working Paper No. 16/61

Subject:

English

Publication Date:

March 14, 2016

ISBN/ISSN:

9781513587752/1018-5941

Stock No:

WPIEA2016061

Format:

Paper

Pages:

34

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