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Mr. Tiago Cavalcanti, Daniel Da Mata, and Mr. Frederik G Toscani

local development of only one country. For instance, the U.S. has a more widespread ownership of resources than Brazil. There are thousands of oil companies in the U.S., in contrast to the historical monopoly of Petrobras in Brazil. Because of this market structure, oil services are more likely to be concentrated in just a few places in Brazil. By contrast, in the U.S. an entire chain of small oil services can be located close to the more widespread oil firms. Finally, we cannot rule out the possibility that oil discoveries positively affect local development of oil

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