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
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)
New Economics Papers: this item is included in nep-int and nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:oxf:oxcrwp:177
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