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Mr. Tiago Cavalcanti, Daniel Da Mata, and Mr. Frederik G Toscani
This paper provides evidence of the causal impact of oil discoveries on development. Novel data on the drilling of 20,000 oil wells in Brazil allows us to exploit a quasi-experiment: Municipalities where oil was discovered constitute the treatment group, while municipalities with drilling but no discovery are the control group. The results show that oil discoveries significantly increase per capita GDP and urbanization. We find positive spillovers to non-oil sectors, specifically, an increase in services GDP which stems from higher output per worker. The results are consistent with greater local demand for non-tradable services driven by highly paid oil workers.
Mr. Tiago Cavalcanti, Daniel Da Mata, and Mr. Frederik G Toscani

are also both quantitatively and qualitatively robust to using alternative control groups. Our additional control groups are all non-oil MCAs in oil discovery states, dry-drilling MCAs which are not adjacent to discovery MCAs (which we call dry drilling, no neighbor), all MCAs which are adjacent to discovery MCAs, and a matched subsample of adjacent MCAs (matched neighbors). The results for the dry drilling, no neighbor control group are reassuring in the sense that any potential spillovers should be particularly limited for this group. 25 Overall, the results are