Resource discoveries and FDI bonanzas: an illustration from Mozambique

Working paper

This paper examines the effect of giant oil and gas discoveries on foreign direct investment in developing economies. Across countries, we document a 58% increase in non-resource extraction FDI in the 2 years following a giant discovery, an event which is unpredictable due to the uncertainty of exploration. This effect is driven by a 30% increase in the number of projects and a 16% increase in targeted sectors. Mozambique's recent FDI boom provides a telling confirmation of this mechanism. Using project-level FDI data combined with multiple waves of household surveys and rm censuses we estimate that each FDI job results in 6.2 additional local jobs, linking the gas-driven FDI bonanza in Mozambique to widespread job creation.

Authors: Vezina, P

• Publication status: Published
• Publisher: University of Oxford
• Series: OxCarre Papers
• Publication date: 2017-11-01
• Paper number: 199
• Keywords: natural resources; local multiplier; investment