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Resource discoveries and FDI bonanzas; An illustration from Mozambique

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  • Gerhard Toews
  • Pierre-Louis Vezina

Abstract

This paper examines the effect of giant oil and gas discoveries on foreign direct investment in developing economies. Across countries, we document a 58% increase in non-resource extraction FDI in the 2 years following a giant discovery, an event which is unpredictable due to the uncertainty of exploration. This effect is driven by a 30% increase in the number of projects and a 16% increase in targeted sectors. Mozambique's recent FDI boom provides a telling confirmation of this mechanism. Using project-level FDI data combined with multiple waves of household surveys and rm censuses we estimate that each FDI job results in 6.2 additional local jobs, linking the gas-driven FDI bonanza in Mozambique to widespread job creation.

Suggested Citation

  • Gerhard Toews & Pierre-Louis Vezina, 2017. "Resource discoveries and FDI bonanzas; An illustration from Mozambique," OxCarre Working Papers 199, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  • Handle: RePEc:oxf:oxcrwp:199
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    File URL: https://www.economics.ox.ac.uk/materials/OxCarre/ResearchPapers/oxcarrerp2017199.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mireille Chiroleu-Assouline & Mouez Fodha & Yassine Kirat, 2020. "Carbon curse in developed countries," PSE-Ecole d'├ęconomie de Paris (Postprint) halshs-02902393, HAL.
    2. Bennett, Patrick & Ravetti, Chiara & Wong, Po Yin, 2020. "Losing in a Boom: Long-term Consequences of a Local Economic Shock for Female Labour Market Outcomes," Discussion Paper Series in Economics 3/2020, Norwegian School of Economics, Department of Economics.
    3. Elheddad, Mohamed, 2019. "Foreign direct investment and domestic investment: Do oil sectors matter? Evidence from oil-exporting Gulf Cooperation Council economies," Journal of Economics and Business, Elsevier, vol. 103(C), pages 1-12.

    More about this item

    Keywords

    Natural resources; investment; local multiplier;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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