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IMF Research Bulletin: Tiago Cavalcanti - 'Winning the Oil Lottery: The Impact of Natural Resource Extraction on Growth'

last modified Jan 27, 2016 11:55 AM

IMF Research Bulletin:

 

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

Tiago Cavalcanti, Daniel Da Mata, and Frederik Toscani


This summary 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.

 

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