The Impact of Oil Windfalls on Subnational Living Standards: Evidence from Argentina

• In Event: The subnational resource curse: effects of oil and mineral wealth on development

Abstract

This paper analyses the impact of oil and gas rents on subnational welfare indicators. One of the key questions in the literature on the socioeconomic effects of oil rents is how can we account for the variation in outcomes in cases as different as Norway or Canada from others such as Iran, Nigeria, or Venezuela. First, we contend that the geographic concentration of oil production and low generation of oil employment negatively affect welfare outputs because enclave-like economies do not promote linkages and spillovers to the rest of the economy. Second, we posit that subnational variation in welfare is related to the institutional framework that regulates the redistribution of oil rents from the oil producing districts to other non-producing regions. We test our argument using regression analysis and a difference-in-difference estimation in Argentina’s provinces that enjoy property rights over natural resources and determine their own systems of oil rent redistribution. 

Authors

• Lucas I Gonzalez, CONICET/Universidad Católica Argentina-Universidad Nacional de San Martin

• German Lodola