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Do Localities Benefit from Natural Resource Extraction?

Author

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  • Dakshina G. De Silva
  • Robert P. McComb
  • 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 longterm 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 & Anita R. Schiller, 2020. "Do Localities Benefit from Natural Resource Extraction?," The Energy Journal, , vol. 41(5), pages 185-212, September.
    • Handle: RePEc:sae:enejou:v:41:y:2020:i:5:p:185-212
    DOI: 10.5547/01956574.41.5.ddes
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    References listed on IDEAS

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    1. 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.
    2. 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.
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    Cited by:

    1. Cai, Jingjing & De Silva, Dakshina G. & Slechten, Aurelie, 2021. "Effects of oil booms on the local environment," Energy Economics, Elsevier, vol. 101(C).
    2. 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).
    3. 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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    More about this item

    Keywords

    Energy; Oil and gas; Industry studies; Per capita income; Public sector revenues and expenditures;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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