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

By Tiago Cavalcanti, Daniel Da Mata, Frederik G Toscani

March 14, 2016

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Tiago Cavalcanti, Daniel Da Mata, and Frederik G Toscani. Winning the Oil Lottery: The Impact of Natural Resource Extraction on Growth, (USA: International Monetary Fund, 2016) accessed December 3, 2024

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.

Subject: Commodities, Economic sectors, Environment, Manufacturing, Natural resources, Oil, Oil production, Production, Services sector

Keywords: Economic Growth, Global, Manufacturing, Natural resources, Oil, Oil and Gas, Oil deposit, Oil discovery, Oil lottery, Oil MCAS, Oil municipality, Oil production, Oil sector, Oil service, Oil worker, Oil-producing firm, Services sector, Urbanization, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/061
Stock No:

WPIEA2016061
ISBN:

9781513587752
ISSN:

1018-5941

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