Studies and researches
Vol. 11 Issue 2 - 12/2019
Assessing the Local Developmental Impact of Hydrocarbon Exploitation in a Mature Region: A Random Forest Approach
The
impact of natural resource exploitation has been a controversial topic, subject
to intense debate. The literature has traditionally focused on its consequences
on national socioeconomic development. More recently, scholars concentrated on
local effects following greater availability of data at the subnational and
project level. We add to the literature by concentrating on Romanian oil and
gas operations, a mature region with a long history of hydrocarbon activities.
Such regions have seldom been studied and we argue that in light of the ongoing
energy transition these should garner greater interest, particularly those
located within the European Union where environmental pressure is significant.
Our methodology consists of testing the ability of the random forest
classification algorithm to distinguish between local communities with oil and
gas operations present and those without on a number of indicators which could
be broadly considered developmental. The algorithm fails to accurately classify
hydrocarbon-intensive communities, indicating that there are no significant
differences between these and the rest. We argue that this is likely due to the
limited tax collection powers of local governments, with royalties going
directly to the central government with no specific distribution provision at
the local level. Another potential explanation may be the diversification of
local economies and existing related manufacturing and services activities.
Read more
Keywords:
random forest, resource curse, hydrocarbon, extractive industry, local development
JEL:
O13, Q32, Q35
random forest, resource curse, hydrocarbon, extractive industry, local development
JEL:
O13, Q32, Q35