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Do Localities Benefit from Natural Resource Extraction?

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  • Dakshina G. De Silva, Robert P. McComb, and Anita R. Schiller

Abstract

There is a strand of the economics literature that considers the regionalized economic effects of natural resource endowments. The so-called Natural Resource Curse suggests that natural resource endowments are associated with lower long-term growth rates in the areas in which the resources are located. Lower growth arises because these areas tend to specialize in the development and exploitation of the natural resources at the expense of other dynamic economic activities that offer higher long-term growth potential. Empirical evidence has, however, not reached consistent conclusions. In this paper, we take advantage of the rapid growth in oil and gas development and production in Texas over the course of a decade to consider the localized effects on inter-industry county-level employment at the NAICS-2, county-level mean and median income, and key public finance measures at both the county and school district levels. Considering the effects within a single, large and economically diverse state enables us to control for important state-level variables that influence local public finances. We find little evidence of short term effects necessary to generate the circumstance of a resource curse over the longer term.

Suggested Citation

  • Dakshina G. De Silva, Robert P. McComb, and Anita R. Schiller, 2020. "Do Localities Benefit from Natural Resource Extraction?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5), pages 185-212.
    • Handle: RePEc:aen:journl:ej41-5-desilva
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    1. Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-238, January.
    2. Dakshina G. De Silva & Robert P. McComb & Anita R. Schiller, 2016. "What Blows in with the Wind?," Southern Economic Journal, Southern Economic Association, vol. 82(3), pages 826-858, January.
    3. Jason Brown, 2014. "Production of natural gas from shale in local economies: a resource blessing or curse?," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 1-29.
    4. Jeremy G. Weber & J. Wesley Burnett & Irene M. Xiarchos, 2016. "Broadening Benefits from Natural Resource Extraction: Housing Values and Taxation of Natural Gas Wells as Property," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 35(3), pages 587-614, June.
    5. repec:wly:soecon:v:82:3:y:2016:p:826-858 is not listed on IDEAS
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    Cited by:

    1. Huang, Xinpeng & Meng, Fanshi, 2023. "Digital finance mitigation of ' resource curse ' effect: Evidence from resource-based cities in China," Resources Policy, Elsevier, vol. 83(C).
    2. Schiller, Anita R. & Slechten, Aurélie, 2025. "Effect of natural resource extraction on school performance: Evidence from Texas," Energy Economics, Elsevier, vol. 144(C).
    3. Cai, Jingjing & De Silva, Dakshina G. & Slechten, Aurelie, 2021. "Effects of oil booms on the local environment," Energy Economics, Elsevier, vol. 101(C).
    4. Anita Schiller & Aurelie Slechten, 2024. "Effect of natural resource extraction on school performance: Evidence from Texas," Working Papers 411897926, Lancaster University Management School, Economics Department.

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