Resource Extraction, Revenue Sharing, and Growth

Margaret Brehm, Paul Brehm, Alecia Cassidy and Traviss Cassidy

MPRA Paper from University Library of Munich, Germany

Abstract: We examine the economic impacts of natural resource revenue-sharing systems, where central governments transfer a portion of resource revenue to producing regions. Using a natural experiment in Indonesia, we separately identify the effects of shared revenue and resource extraction. Contrary to Dutch disease concerns, shared oil and gas revenue does not harm local manufacturing firms, while extraction promotes manufacturing growth. Both extraction and shared revenue significantly raise local non-oil GDP. We find suggestive evidence of larger gains from shared revenue in areas without onshore extraction, implying central governments could improve aggregate welfare by channeling more resource revenue toward resource-poor areas.

Keywords: Growth; resource booms; decentralization; manufacturing firms; Indonesia; Dutch disease (search for similar items in EconPapers)
JEL-codes: H77 O13 O14 Q32 Q33 (search for similar items in EconPapers)
Date: 2024-07-09
New Economics Papers: this item is included in nep-dev, nep-ene and nep-sea
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https://mpra.ub.uni-muenchen.de/123531/1/MPRA_paper_123531.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:121428

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