Can Black Gold Shine? The Effect of Oil Prices on Night-time Light in Brazil

We explore the existence of a local “resource curse” in the case of Brazil’s oil. To this end, we examine the effect of changes in international oil prices interacted with measures of oil access on nighttime light – a measure of economic activity -- across the country.  We fail to detect evidence of a resource curse: in fact, a better access to oil enhances the positive effect of oil prices on light. Our estimates indicate that a doubling of oil prices causes an average increase in luminosity of some 50 percent more in oil rich than in oil poor states; and about 30 percent more in localities within 100 km distance to the nearest oil field relative to more remote localities.