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Resource Booms, Revenue Sharing, and Growth

Author

Listed:
  • Brehm, Margaret E.
  • Brehm, Paul A.
  • Cassidy, Alecia
  • Cassidy, Traviss

Abstract

Using a natural experiment in Indonesia, we estimate the separate economic effects of natural resource booms and shared resource revenue. Contrary to Dutch disease concerns, oil and gas booms promote manufacturing growth, and shared revenue does not harm local manufacturing firms. Shared revenue significantly raises local non-oil GDP, but resource booms do not. Supply-side factors help explain the results: shared revenue increases local population and firm entry, while resource booms do not. Oil and gas booms thus benefit local economies largely through shared revenue. Where the revenue is spent matters more for local growth than where the resources are extracted.

Suggested Citation

  • Brehm, Margaret E. & Brehm, Paul A. & Cassidy, Alecia & Cassidy, Traviss, 2024. "Resource Booms, Revenue Sharing, and Growth," MPRA Paper 128970, University Library of Munich, Germany, revised 28 Apr 2026.
    • Handle: RePEc:pra:mprapa:128970
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    Keywords

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    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • 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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