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Manufacturing in a Natural Resource Based Economy: Evidence from Canadian Plants

Saeed Moshiri (), Gry Østenstad and Wessel N. Vermeulen§

No 216, OxCarre Working Papers from Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford

Abstract: This study investigates the effects of an oil boom on firms’ performance using data from the Canadian Annual Survey of Manufactures. We exploit the time variation of the booming natural resource sector activity in an oil-producing area with the location of manufacturing plants. We hypothesize that the effect of the booming sector on plants depends on their spatial proximity, which allows us to create an exogenous treatment variable. The outcome variables include plant-level wages, employment, sales, and exports. We find that the effect of the booming sector on the incidence of exporting varies greatly by plant-level productivity. More productive plants become more likely to export relative to less productive plants. They can do so by paying a higher wage, while employment grows less than plants that serve only the domestic market. We find that initial productivity and plants’ ability to export provides an important differentiation in average plants effects. In particular, while there is a great variety in the effect by sector, a clear linkage with the resource industry is not observed.

Keywords: natural resources; heterogeneous firms; regional economics (search for similar items in EconPapers)
JEL-codes: L6 O4 R11 R15 (search for similar items in EconPapers)
Date: 2019-02-15
New Economics Papers: this item is included in nep-ene
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