This study focuses on investigating the spillover effects of natural gas extraction on neighbouring economies, particularly at the district level in Indonesia. For the analysis, the study applies a range of panel difference-in-differences approaches, comparing non-gas-producing districts in rich-gas provinces as the treatment group and non-gas-producing districts in scarce-gas provinces as the control group for the period before and during the gas boom, 2002-2004 and 2005-2015, respectively. This setup exploits government intervention through the Natural Resource Revenue Sharing Scheme, wherein all districts in gas-producing provinces receive amount of revenues from gas production. The results show that non-gas-producing districts in rich-gas provinces have lower Gross Domestic Product (GDP) per capita compared to those in poor-gas provinces. Gas windfall also increases the poverty rate and the number of people living below poverty line. The findings provide evidence that gas windfall is a curse rather than a blessing for the local economies near gas-extraction sites.

Speaker: Abdul Nasir (Arndt-Corden Department of Economics, The Australian National University)

Wednesday, 13 March 2024 at 10.00-11.30 WIB.

Online in English. Register bit.ly/fkp0313