Rick van der Ploeg

Do Natural Resources Attract FDI? Evidence from Non-Stationary Sector-Level Data

A new and extensive panel of outward foreign direct investment (FDI) at the sector level is used to estimate the determinants of non-resource and resource FDI. Since FDI is I(1), we estimate panel error-correction models of FDI with spatial lags for FDI and market potential. Our main result is that subsoil assets boost resource FDI, but crowd out non-resource FDI. The effect on non-resource FDI dominates, so that aggregate FDI is less in resource-rich countries. Spatial lags aggravate this crowding out of non-resource FDI. In addition, we find that (i) resource FDI is mainly vertical whereas other FDI is of the export-fragmentation variety; (ii) trade openness, free trade agreements and institutional quality do not impact non-resource FDI but institutional quality does have a positive effect on resource FDI; and (iii) the short-run dynamics comes mostly from shocks to FDI itself. Our main and ancillary results are robust to different measures of resource reserves and the oil price and to allowing for sample selection bias.

Rapacious Oil Exploration in face of Regime Switches: Breakthrough Renewable Energy and Dynamic Resource Wars

Rapacious fossil fuel extraction occurs if fossil fuel producers fear that there is a probability that their under-the-ground assets becomes worth less. They show that rapacious depletion of oil reserves occurs if there is a probability of a breakthrough renewable energy coming to the market or a probability of climate policy finally becoming seriously ambitious. These are examples of one-way regime switches leading to the so-called Green Paradox. Two-way regimes switches also lead to rapacious oil depletion. They occur if there is a chance of being removed from office in a partisan political context with perennial election cycles or if there are dynamic resource wars with the hazard of being removed from office dependent on fighting efforts. This rapacity effect is stronger in societies with bad institutions and lack of political cohesiveness.

Natural Resources Make Rich

Many countries have experienced windfalls though discoveries of oil, gas, gold, diamonds, copper, or other minerals. These can constitute 80–90 % of government or export revenues for many developing countries. Such foreign exchange windfalls offer a unique opportunity for resource-rich countries to improve the future of their citizens by speeding up their growth and development path. The obvious policy is to transform subsoil into aboveground wealth whether it is through human capital, health, infrastructure, or sovereign wealth. By investing in the domestic economy or saving foreign assets, consumption can be permanently increased even long after the flow of windfall revenues has ceased.

Energy modeling post 1973

Energy modeling post 1973 John Feddersen, Florian Habermacher, Jan Imhof & Rick van der Ploeg a Aurora Energy Research, Oxford, United Kingdom b New York University Abu Dhabi, Abu Dhabi, United Arab Emirates c Smith School of Enterprise and the Environment, University of Oxford, Oxford, United Kingdom d Department of Economics, University of St. Gallen, St. Gallen, Switzerland e Departement of Management, Technology and Economics, ETH Zurich, Zurich, Switzerland f Department of Economics, University of Oxford, Oxford, United Kingdom Published online: 24 Apr 2015.