HHUiS ønsker alle interesserte velkommen til åpent fagseminar tirsdag 2. september kl 12:15-13:15 med Torfinn Harding fra Norges handelshøyskole, NHH.
Tittel: Institutions and the Location of Oil Exploration
Tid: Tirsdag 2. september kl. 12:15 - 13:15
Sted: Handelshøgskolen ved UiS, Ellen & Axel Lunds hus, auditorium H-317
We provide evidence that institutions strongly influence where investors drill for oil and gas. At national borders, investors choose to drill on the side with better institutional quality two out of three times. We study developing countries and institutions in the form of political rights and democracy, among others. To identify the effect of institutions, we utilise a global data set on the location of exploration wells and national borders. This allows for a regression discontinuity design, with the key assumption that the position of borders was determined independently of geology.
To break potential simultaneity between borders, institutions and activities in the oil sector, we utilise a historical sequence of drilling occurring after the formation of borders and institutions. Our results are consistent with the view that institutions shape the incentives to invest and imply that the observed distribution of natural capital across countries is endogenous with respect to institutions.