A Resource-Rich Neighbor Is a Misfortune: The Spatial Distribution of the Resource Curse in Brazil

We study the spatial distribution of the effect of oil and gas revenues on Brazilian municipalities, using variations in international prices to establish causality. Those revenues increase nighttime light emissions in oil-producing municipalities but impose negative spillovers on neighboring municipalities, especially those located more than 150 kilometers from oil activities. The two effects cancel out at the level of microregions. In oil-producing municipalities, oil and gas revenues increase royalties, population, prices, crime, and real wages, particularly in manufacturing and service sectors. Spillovers are negative on wages and prices but positive on royalties and crime.