Oil Discovery, Boom-Bust Cycle and Manufacturing Slowdown: Evidence from a Large Industry Level Dataset

Nouf Alsharif () and Sambit Bhattacharyya
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Nouf Alsharif: Department of Economics, University of Sussex, BN1 9SL Falmer, United Kingdom

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: We investigate the effects of giant oil discovery and boom-bust price cycle on manufacturing using a large dataset of up to 49481 two-digit industry-years across 136 countries over the period 1962 to 2012. We find that oil discovery reduces growth in manufacturing value added and wages. The effect on employment is insignificant. We also find strong association between oil discovery and manufacturing slowdown episodes. Oil price boom and bust both negatively affects manufacturing perhaps due to increasing input cost (boom) and declining demand (bust). We do not find any evidence in favor of a real exchange rate appreciation driven effect as outlined in standard Dutch Disease models. We speculate that the effect is primarily driven by an increase in the cost of locally sourced manufacturing input.

Keywords: Oil discovery; Boom-Bust; Manufacturing growth (search for similar items in EconPapers)
JEL-codes: D72 O11 (search for similar items in EconPapers)
Date: 2022-05
New Economics Papers: this item is included in nep-ene and nep-opm
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Related works:
Journal Article: Oil discovery, boom‐bust cycle and manufacturing slowdown: Evidence from a large industry level dataset (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:0222

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