Booming Sector, Multinationals, and Local Economic Development

Can a resource boom induce long-term local economic development? Do multinational companies (MNCs) foster such equilibria or move away the economic gains from the booming sector? This study examines the heterogeneous economic impacts of MNCs and domestic firms on the characterization of the contemporaneous and long-term general equilibrium effects of resource booms in local labor markets. Consistent with the predictions of a spatial equilibrium model that features a pre- and post-booming economy with productive linkages and endogenous amenities, the evidence from a major emerging resource-oriented country suggests that spillovers from productive linkages of the booming sector can prevent productivity losses in the form of local Dutch-Disease, with higher productivity spillovers for MNCs in comparison to domestic firms. However, these spillovers are mediated by dis-amenities rising from externalities in production, and the propensity of firms to offshoring