Resource development and governance declines: The case of the Chad–Cameroon petroleum pipeline

Abstract

In this paper, we study the effects of the Chad–Cameroon Petroleum Development and Pipeline Project that allowed Chad to begin producing and exporting oil. The project was financed under heavy restrictions by the World Bank in an attempt to avert the resource curse. The majority of revenue from the resource was to be directed back into development programs with minimal government discretion. Using synthetic control matching and synthetic difference in differences, we find that oil production had immediate and persistent negative impacts on the quality of governance, increased GDP per capita, but had little lasting effects on measured development outcomes such as infant mortality and health spending. Our findings offer new empirical evidence for the political resource curse and suggest that the World Bank’s experiment to impose rules over management of resource rents was not sufficient to ensure widespread benefits from natural-resource wealth.