Spatial Inference on Oil and Economic Development

The value of oil and gas production amounts to between two and five percent of the world's total income. The aim of the project is to learn more about how income from oil production, and corresponding income and transfers from other sources, affect the social and economic development within and across local areas and regions, using, among other things, new, unique oil data. A main reason why we still lack knowledge is that researchers have so far lacked geographically located information (map data). In recent years, however, this has changed. Several datasets now exist with detailed information on everything from local income, health, ethnicity, infrastructure and population density, to conflict and war. This data originates, for example, from satellite images, biological and geological samples, or population surveys. The project connects social and economic data with oil and gas data from the Norwegian oil consultancy company Rystad Energy, as well as aid transfers from the World Bank and hydropower income in Norwegian municipalities. With this data, we can estimate how this income propagates within and across geographical distances and regions, over time. In a next step, we can then study how local social and economic conditions are affected. The project has contributed to new insights into, among other things, the connections between the localization of oil and violent conflict (published in 2021 in a top international journal in the field of conflict, the Journal of Conflict Resolution), religion and women's labor force participation (published in 2021, in the Journal of Economic Behavior & Organization), oil and hydropower revenues, political behavior and corruption (published in 2022 in the international "top field" journal Journal of Public Economics) and how not only oil revenues but also aid can be linked to money flows to tax havens (published in 2022 in the international top-5 journal Journal of Political Economy). Ongoing research in the project focuses, among other things, on the connections between the localization of other economic activity and new oil deposits, between oil and democratic development, and between oil taxes and greenhouse gas emissions (revised draft requested by the international top-5 journal Review of Economic Studies). In total, as of 2023, the project has contributed to one doctorate (at BI Norwegian Business School), three very solid publications in international economics journals, a "revise-and-resubmit" in a top-five journal, three working papers, and several works in progress. Some of the project's works have also received wide international attention. This particularly applies to the work on aid flows to tax havens, which has been mentioned in The Economist, Financial Times, Le Monde, Frankfurter Allgemeine, and in Norway in Dagens Næringsliv and NRK's ??Dagsnytt 18. But other works have also received international and national attention, such as the work on oil and conflict which is discussed, among other things, in the internationally recognized research magazine VoxEu, and in a column in Aftenposten.

Prosjektets viktigste virkning har vært å bidra til ny kunnskap om økonomiske, politiske og klimamessige effekter av olje- og gassaktivitet og inntekter, samt annen økonomisk aktivitet med tilsvarende store ressursvirkninger (spesielt utviklingsbistand og vannkraftproduksjon). Prosjektet har dokumentert effekter av denne typen aktivitet på, blant annet, konflikt, demokratisering, korrupsjon, og klimautslipp (Co2). Prosjektets funn har således en rekke politikkimplikasjoner, for internasjonalt fredsarbeid, demokrativirkninger av "den grønne overgangen", effektiviteten av utviklingsbistand, og regulering og skattlegging av olje- og gassvirksomhet i et klimaperspektiv. Prosjektets forskning har allerede fått betydelig nasjonal og internasjonal oppmerksomhet - spesielt forskningen som dokumenterer hvordan olje- og bistandsinntekter utløser pengestrømmer fra mottakerlandene til private konti i skatteparadiser, men også forskningen på olje og konflikt. Til slutt har prosjektet dannet grunnlag for nye forskningsidéer og vi forventer derfor at prosjektet vil fortsette å bidra med ny kunnskap i flere år fremover. (In English: The project's most important effect has been to contribute to new knowledge about the economic, political and climate-related effects of oil and gas activity and income, as well as other economic activity with correspondingly large resource effects (especially development aid and hydropower production). The project has documented the effects of this type of activity on, among other things, conflict, democratisation, corruption and climate emissions (Co2). The project's findings thus have a number of policy implications, for international peace work, democratic effects of the "green transition", the effectiveness of development aid, and regulation and taxation of oil and gas activities in a climate perspective. The project's research has already received considerable national and international attention - especially the research that documents how oil and aid income triggers money flows from the recipient countries to private accounts in tax havens, but also the research on oil and conflict. Finally, the project has formed the basis for new research ideas and we therefore expect that the project will continue to contribute new knowledge for several years to come.)

Oil is one of the world's most valuable resources. Yet, there is little consensus on the broader impact of the oil wealth on social and economic development. Perhaps a main reason for this lack of precise knowledge has been a lack of high-resolution data on the spatial distribution of the oil resources. The main contribution of the current project is to explore the spatial relationship between oil and development by exploiting a new, rich database (Rystad Energy's UCube) on the geographical distribution of petroleum resources, pipelines and refineries, since 1900. The project couples the oil data with data on social, economic, and political outcomes - also geographically localized - and analyze the data using state-of-the-art methods on spatial empirical inference. To our knowledge, this has not been done previously. Knowing the exact geographic distribution of oil and gas resources, we can estimate whether regions close to the resources benefit more from windfall gains than distant regions, to what extent rents are captured by the capital or regional capitals, and whether rents exclusively accrue domestically or there are spillovers across borders. Having established how the oil rents are distributed geographically, one can further study how other developmental outcomes are shape and address questions of first order importance such as: Is civil warfare more prevalent in regions with large oil rents? Is the oil wealth evenly distributed or geographically concentrated along, f.ex., elite-, regional- or ethnic lines? To what extent do the abovementioned associations vary across countries with different characteristics, or depend on the identity or the technical characteristics of the oil producers? Learning about the economic and social geography of oil has relevance far beyond the pure academic interest - for companies, governments, or organizations operating in oil rich regions around the world. We aim to understand the social impact of these types of operations.