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
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)
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Persistent link: https://EconPapers.repec.org/RePEc:oxf:oxcrwp:199
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