Oil and Gas Production and Economic Growth in New Mexico

This paper examines the relationship between energy production and economic growth in New Mexico using cross section data for the state's 33 counties in Census years 1960, 1970, 1980, 1990 and 2000. The central question is whether or not New Mexico's counties are subject to the resource curse, a phenomenon documented frequently in the literature. Most empirical studies of the resource curse hypothesis have used national or state level data and a broad definition of natural resources. In contrast, this analysis uses county level data with a focus on oil and gas extraction. The estimated models suggest that oil and gas extraction in New Mexico counties has had a small but positive effect on income, employment and population. Similar results were obtained when the model was estimated for 925 counties in 13 energy producing states for the year 2000.