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Is it a curse or blessing to have a resource-rich neighbour? The case of gas extraction in Indonesia

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

PhD Seminar (Econ)

Date & time

Friday 18 August 2023
11.00am–12.15pm

Venue

Online via Zoom

Speaker

Abdul Nasir

This paper focuses on investigating the causal effects of natural gas extraction on the neighbour economies, particularly at the district level in Indonesia. The study applies a panel difference-in-differences method by comparing non-gas-producing districts in rich-gas provinces as the treatment group and non-gas-producing districts in scarce-gas provinces as the control group in the period before and during gas booms, 2002-2004 and 2005-2015, respectively. This setting exploits the government intervention through resource revenue sharing mechanism in which all districts in gas-producing provinces receive amount of revenues from gas production. The results show that non-gas-producing districts in rich-gas provinces have lower GDP per capita compared to those in poor-gas provinces. This finding provides another evidence that gas windfall is a curse, rather than a blessing for the local economies near gas-extraction sites.

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