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

Gerhard Toews and Pierre-Louis Vézina

The Review of Economics and Statistics, 2022, vol. 104, issue 5, 1046-1058

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.

Date: 2022
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