An Investigation of the Resource Curse in Indonesia

Type of content
Reports
Publisher's DOI/URI
Thesis discipline
Degree name
Publisher
RePEc
Journal Title
Journal ISSN
Volume Title
Language
Date
2018
Authors
Clark JE
Hilmawan R
Abstract

We investigate the effect of resource dependence on district level income in a rare within-country study for Indonesia, one of the largest resource producing countries in Asia. We follow 390 districts between 2006 and 2015, consider four alternative measures of resource dependence, and instrument for the potential endogeneity of each using historical measures of oil, gas and coal reserve locations, and changes in the physical production of each resource. Using annual fixed effects and first differenced regressions with and without various instruments, we find no evidence of a “resource curse”. Instead, we find robust evidence across all models that dependence as measured by mining’s share of output is positively associated with district real per capita income. We find a similar positive relationship between dependence as measured by the share of district government revenues from oil and gas or mining overall, and income in our most credible specifications with instruments. For example, a standard deviation increase in change in district government dependence on oil/gas revenues increases real per capita income by 16 percent over a nine year period.

Description
Citation
Keywords
Ngā upoko tukutuku/Māori subject headings
ANZSRC fields of research
Fields of Research::38 - Economics::3801 - Applied economics::380105 - Environment and resource economics
Rights