Oil Windfalls and Regional Economic Performance in Russia

In the new CAMP Working Paper 02/2022, Skretting constructs a novel dataset to investigate the effects of oil income in regions of Russia. The data combines regional level data on oil endowments and a wide range of economic series for 85 geographical regions of Russia. Focusing on exogenous oil windfall gains induced by movements in oil prices, she compares outcomes in oil endowed regions to outcomes in other areas. In doing so, she shows that oil resources do not seem to benefit regional economic growth. Indeed, Skretting provides evidence that oil windfalls lead to an expansion of the local public sector and a contraction of the private sector, resulting in lower profitability and a decline in economic growth. Overall, the results indicate that only a small share of revenues benefits the local population and that there are signs of missing money.

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