The Impact of Oil Rents on Subnational Development: Evidence from Argentina

Abstract

This article analyses the relation between mineral rents and development outcomes at the subnational level. The classical literature suggests that natural resource abundance has negative effects on well-being, a situation referred to as the resource curse. However, a novel strand of research emphasizes that rentier states worldwide exhibit contrasting outcomes. To account for such variation, this investigation aligns with approaches stressing the significance of contextual (place and institutional) factors to studying the resource curse. The main claim in this work is that both structural and institutional factors related to the extractive industry help account for variation in development outcomes. It contends that mineral rents are positively associated with human development and economic industrialization when the extractive sector is not geographically concentrated in enclave economies, and subnational fiscal institutions redistribute enough rents from producing to non-producing districts. It empirically tests this argument using a time series cross-sectional analysis, a difference-in-difference (DiD) estimation, and two case studies in Argentina, a country where subnational territorial units collect mineral royalties and have exogenously created their own rent-sharing regimes. It finally provides some comparative implications that may contribute to current debates on the socioeconomic impact of natural resource wealth.

El análisis subnacional: aportes teóricos y metodológicos a la política comparada

“…42 Al situar a los estudios de caso subnacionales dentro de una población mayor y "fuera de muestra" de casos subnacionales, los diseños anidados permiten que los investigadores puedan evaluar la validez externa de sus resultados. Los estudios subnacionales anidados han arrojado luz sobre una amplia variedad de temas, como la provisión de bienes públicos (Tsai 2007), la política de la regulación y la privatización (Herrera 2014;Post 2014), la política étnica y el desarrollo (Lieberman 2009), la "maldición de los recursos naturales" (González 2018;González y Lodola 2019), el clientelismo (Weitz-Shapiro 2014) y la violencia étnica (Varshney 2002). Sin embargo, como lo advierten Harbers e Ingram (2019), la probabilidad de que entre unidades subnacionales ubicadas en el mismo país exista dependencia espacial es elevada y esto plantea una dificultad para este tipo de diseños anidados de métodos mixtos.…”

Power in natural resource governance projects: power hierarchies in the negotiation of an international petroleum contract

“…Resource-dependent countries typically rely on foreign oil companies to extract and produce their natural resources (Bridge & Le Billon, 2017). As a result, host governments court such companies for investment and their expertise, negotiate terms of engagement with them, regulate the industry, and receive and redistribute resource rents from extraction (Mahdavy, 1970;Johnston, 1994;Dunning, 2008;González & Lodola, 2019;Sandbakken, 2006). Resource-led development has been embraced as a strategy to spur economic development in resource-dependent countries (Ogwumike & Ogunleye, 2008;Mahdavy, 1970).…”

Teaching Environmental Justice

“…Resource-dependent countries typically rely on foreign oil companies to extract and produce their natural resources (Bridge & Le Billon, 2017). As a result, host governments court such companies for investment and their expertise, negotiate terms of engagement with them, regulate the industry, and receive and redistribute resource rents from extraction (Mahdavy, 1970;Johnston, 1994;Dunning, 2008;González & Lodola, 2019;Sandbakken, 2006). Resource-led development has been embraced as a strategy to spur economic development in resource-dependent countries (Ogwumike & Ogunleye, 2008;Mahdavy, 1970).…”