Manufacturing in a Natural Resource Based Economy: Evidence from Canadian Plants

Department of Economics, OxCarre (Oxford Centre for the Analysis of Resource Rich Economies), OxCarre Research Paper 216

31 Pages Posted: 18 Apr 2019

See all articles by Saeed Moshiri

Saeed Moshiri

Saint Thomas More College University of Saskatcehwan

Gry Østenstad

affiliation not provided to SSRN

Wessel Vermeulen

OXCARRE

Date Written: February 2019

Abstract

This study investigates the effects of an oil boom on firms’ performance using data from the Canadian Annual Survey of Manufactures. We exploit the time variation of the booming natural resource sector activity in an oil-producing area with the location of manufacturing plants. We hypothesize that the effect of the booming sector on plants depends on their spatial proximity, which allows us to create an exogenous treatment variable. The outcome variables include plant-level wages, employment, sales, and exports. We find that the effect of the booming sector on the incidence of exporting varies greatly by plant-level productivity. More productive plants become more likely to export relative to less productive plants. They can do so by paying a higher wage, while employment grows less than plants that serve only the domestic market. We find that initial productivity and plants’ ability to export provides an important differentiation in average plants effects. In particular, while there is a great variety in the effect by sector, a clear linkage with the resource industry is not observed.

Suggested Citation

Moshiri, Saeed and Østenstad, Gry and Vermeulen, Wessel, Manufacturing in a Natural Resource Based Economy: Evidence from Canadian Plants (February 2019). Department of Economics, OxCarre (Oxford Centre for the Analysis of Resource Rich Economies), OxCarre Research Paper 216. Available at SSRN: https://ssrn.com/abstract=3357023 or http://dx.doi.org/10.2139/ssrn.3357023

Saeed Moshiri (Contact Author)

Saint Thomas More College University of Saskatcehwan ( email )

1437 College Dr
Saskatoon, Saskatchewan S7N 0W6
Canada

Gry Østenstad

affiliation not provided to SSRN

Wessel Vermeulen

OXCARRE ( email )

Mansfield Road
Manor Road Building,Manor Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

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