Winning the Oil Lottery: The Impact of Natural Resource Extraction on Growth
Monday 31st March 2014
CINET:
1406
Cavalcanti, T. V. D., Da Mata, D. and Toscani, F.
This paper provides evidence on the causal impact of oil discoveries on local 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 labor productivity. The results are consistent with greater local demand for
non-tradable services driven by highly paid oil workers.
Keywords
Petroleum Industry
Economic Growth
Urbanization
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