evidence discusses whether natural resource wealth throughout the years has been a blessing or a curse for LAC, with conflicting results pointing to Dutch disease type problems as well as weak institutions fueled by natural resource rents on the one hand, and the benefits of receiving a wealth windfall combined with positive real sector spillovers from resource extraction on the other hand (see, for example, World Bank, 2010 ).
This paper contributes to the debate by studying the following three questions: What is the impact of naturalresourcediscoveries in the
This paper studies the impact of natural resource extraction in Latin America and the Caribbean (LAC) from a number of angles. First, we exploit a novel dataset on the universe of giant oil and gas discoveries in the region to trace out the cyclical response of macroeconomic variables to discoveries over the short- and medium-run. Second, we use non-stationary panel data techniques to look at the long-run (trend) relationship between GDP per capita and the value of oil and gas production—our results imply that the recent fall in prices could depress GDP per capita by several percentage points. Last, we use Bolivia, which discovered huge gas reserves in the late 1990s, as a case study to apply the cross-country results and to study the impact of discoveries at the subnational level.