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Resource Discoveries, FDI Bonanzas, and Local Multipliers: Evidence from Mozambique

Author

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  • Gerhard Toews
  • Pierre-Louis Vezina

Abstract

We show that giant and unpredictable oil and gas discoveries trigger FDI bonanzas. Across developing countries, we document a 56% increase in FDI in the two years following a giant discovery. These booms are driven by new projects in sectors such as manufacturing, retail, services, and construction. To assess the job creation effects of one such FDI bonanza in Mozambique, we combine concurrent waves of household surveys and firm censuses and estimate the local job multiplier of FDI. Our estimates suggest that for each new FDI job, an additional 4.4 jobs are created locally, 2.1 of which are formal jobs.

Suggested Citation

  • Gerhard Toews & Pierre-Louis Vezina, 2022. "Resource Discoveries, FDI Bonanzas, and Local Multipliers: Evidence from Mozambique," The Review of Economics and Statistics, MIT Press, vol. 104(5), pages 1046-1058, December.
    • Handle: RePEc:tpr:restat:v:104:y:2022:i:5:p:1046-1058
    DOI: 10.1162/rest_a_00999
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    Cited by:

    1. Brian McCaig & Nina Pavcnik & Woan Foong Wong, 2022. "Foreign and Domestic Firms: Long Run Employment Effects of Export Opportunities," NBER Working Papers 30729, National Bureau of Economic Research, Inc.
    2. Doytch, Nadia & Elheddad, Mohamed & Perez-Sebastian, Fidel, 2025. "New climate policy, resource abundance, and sectoral FDI," Energy Economics, Elsevier, vol. 145(C).
    3. Grover, Arti & Vézina,Pierre-Louis, 2025. "Geopolitical Fragmentation and Friendshoring : Evidence from Project-Level Foreign Investment Data," Policy Research Working Paper Series 11149, The World Bank.
    4. M. H. Davies & M. Schröder, 2025. "A simple model of internal and external balance for resource‐rich developing countries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 69(1), pages 178-199, January.
    5. Rabah Arezki & Youssouf Camara & Frederick van Der Ploeg & Grégoire Rota-Graziosi, 2024. "Bad Samaritans In Foreign Aid: Evidence From Major Mineral Discoveries," Working Papers hal-04789791, HAL.
    6. Aiyar, Shekhar & Malacrino, Davide & Presbitero, Andrea F., 2024. "Investing in friends: The role of geopolitical alignment in FDI flows," European Journal of Political Economy, Elsevier, vol. 83(C).
    7. Tabea Lakemann & Jann Lay & Regina Schnars & Tevin Tafese, 2025. "Greenfield FDI and job creation in Africa," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 161(1), pages 413-440, February.
    8. Utsoree Das & Erik Katovich & Jonah M. Rexer, 2025. "Local and Multinational Comparative Advantage in the Global Mining Industry," Working Papers 2025.15, International Network for Economic Research - INFER.
    9. Raveh, Ohad & Zhang, Yan, . "Giant Oil Discoveries and Long-Term Health Effects: Evidence from China," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 49(2).
    10. Mulabdic, Alen & Nayyar, Gaurav, 2024. "Is the U.S. Friend-Shoring, Nearshoring, or Reshoring ? Evidence from Greenfield Investment Announcements," Policy Research Working Paper Series 11006, The World Bank.
    11. Li, Xiuqing & Xiao, Liming, 2024. "The impact of urban green business environment on FDI quality and its driving mechanism: Evidence from China," World Development, Elsevier, vol. 175(C).
    12. Paul,Saumik & Raju,Dhushyanth, 2023. "Sectoral Productivity Shock, Regional Differences in Intersectoral Linkages, andStructural Transformation in Ghana," Policy Research Working Paper Series 10446, The World Bank.

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