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Oil and Regional Development in Chad: Assessment of the Impact of the Doba Oil Project on Poverty in the Host Region
Author(s) -
Aristide Mabali,
Moundigbaye Mantobaye
Publication year - 2017
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/1467-8268.12232
Subject(s) - poverty , spillover effect , consumption (sociology) , economics , oil boom , oil consumption , order (exchange) , development economics , business , economic growth , macroeconomics , engineering , finance , social science , sociology , automotive engineering
In 1999, the Chad Government passed Law No. 001/PR/1999, establishing rules for allocating and managing the expected oil income from the Doba Oil project. The oil producing region's share amounts to 5 per cent of royalties, in addition to other benefits related to its status as an oil producing region, in order to mitigate negative effects from the oil project. This paper assesses the poverty profile in the Logone Oriental region, by combining a double difference estimator with propensity score matching methods. Data from two panels of the Survey on Consumption and the Informal Sector in Chad carried out in 2003 and 2011 show that monetary poverty increased in the oil producing region compared to the control regions. No evidence was found that non‐monetary poverty decreased in the oil producing region, as large investments in social infrastructure in the region might have suggested. In addition, it was found that household expenditure for temptation goods increased in this region compared with other regions. Finally, spillover effects were observed — the oil producing region's neighboring regions are more likely to experience poverty. These results cast doubt on the effectiveness of the law and of its replication for newly discovered oil fields.