Is there a natural resource curse at local levels? An evidence from village economies in Indonesia

Crawford School of Public Policy
Bart Speelman on Wikimedia Commons

Event details

PhD Seminar (Econ)

Date & time

Friday 01 October 2021
11.00am–12.00pm

Venue

Online via Zoom

Speaker

Abdul Nasir

Empirical debates on the existence of natural resource curse are mainly at national level economies. Less empirical works observe the existence of this phenomenon at the grass root or local level. This paper investigates any causal relationship between oil extractions and local economic activities in Indonesian villages where oil well has been drilled, i.e., oil explorations have been conducted in those villages. The identification in this paper relies on the randomness that significant amount of oil could actually be found and later on commercially extracted in some of those wells. Dataset in this paper covers approximately 1200 villages across Indonesia where oil explorations have been conducted during the period of 1900-2012. We observe the impact of these oil extractions on the village’s economic activities in 2016. The results show that the existence of oil extraction has a significantly negative effect on the number of small enterprises established and the number of labours working in those small enterprises in a village. This paper, hence, shows the presence of natural resource curse in local levels.

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