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Resource discoveries and FDI bonanzas

Pierre-Louis Vézina ()
Authors registered in the RePEc Author Service: Gerhard Toews ()

No 177, OxCarre Working Papers from Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford

Abstract: This paper examines the examines the effect of giant oil and gas discoveries on foreign direct investment in developing economies using a new project-level dataset. We document a large increase in non-extraction FDI in the 2 years following a giant discovery, an event which is unpredictable due to the uncertain nature of exploration. We find that FDI inflows increase by 73% and that this wave is driven by a 37% increase in the number of FDI projects as well as a 22% increases in source countries and a 17% increase in target sectors. We interpret this FDI response as evidence for the news-driven business-cycle hypothesis within a developing country setting and highlight FDI bonanzas as an important development channel for resource rich economies.

Keywords: giant discoveries; news shocks; investment. (search for similar items in EconPapers)
JEL-codes: F21 F23 Q32 Q33 (search for similar items in EconPapers)
Date: 2016-08-29
New Economics Papers: this item is included in nep-int and nep-ppm
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Citations: View citations in EconPapers (9) Track citations by RSS feed

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Persistent link: https://EconPapers.repec.org/RePEc:oxf:oxcrwp:177

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