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Resource discoveries and FDI bonanzas; An illustration from Mozambique

Gerhard Toews () and Pierre-Louis Vézina ()

No 199, OxCarre Working Papers from Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford

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.

Keywords: Natural resources; investment; local multiplier (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-ene and nep-int
Date: 2017
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