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Global boom, local impacts: Mining revenues and subnational outcomes in Peru 2007-2011

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  • Omar Zambrano
  • Marcos Robles
  • Denisse Laos

Abstract

The relationship between the abundance of natural resources and socio-economic performance has been a main object of study in the economic development field since Adam Smith. Dominated by the verification of the so called curse of natural resource, the mainstream literature on the topic has been mostly on the study of cross sectional data at the national level, with limited empirical use of exogenous differences in the abundance of natural resources at the subnational level. We explore the case of Peru, a mining-rich middle income country where -exploiting a unique data set constructed for this purpose- we are able to assess systematic differences in district-level welfare outcomes between mining and non-mining districts. We find evidence that the condition of being mining-abundant district have a significant impact on the pace of reduction of poverty rates and inequality levels. We also estimate a heterogeneous response to the mining-abundant condition, finding stronger responses in lower-poverty, higher-inequality districts. Finally, we find a trend suggesting incremental positive marginal effects of the level of exposure to mining transfer, as proxy for the degree of abundance of mining activities, on the reduction of poverty and inequality.

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Bibliographic Info

Paper provided by Inter-American Development Bank in its series IDB Publications with number 85133.

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Date of creation: May 2014
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Handle: RePEc:idb:brikps:85133

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Related research

Keywords: Poverty reduction; Natural Resources Management; Energy & Mining; Propensity-score matching; Natural resources; Consumption inequality; Mining transfers; Fiscal revenues; Local impacts; Mining revenues; Poverty maps; Natural resource curse; Resource booms; Mining transfers; Poverty; Inequality; Treatment effect models;

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  1. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Institutions and the resource curse," Development and Comp Systems, EconWPA 0210003, EconWPA.
  2. Francesco Caselli & Guy Michaels, 2009. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," CEP Discussion Papers, Centre for Economic Performance, LSE dp0960, Centre for Economic Performance, LSE.
  3. Rodriguez, Francisco & Sachs, Jeffrey D, 1999. " Why Do Resource-Abundant Economies Grow More Slowly?," Journal of Economic Growth, Springer, Springer, vol. 4(3), pages 277-303, September.
  4. Loayza, Norman V. & Rigolini, Jamele & Calvo-Gonzalez, Oscar, 2011. "More than you can handle : decentralization and spending ability of Peruvian municipalities," Policy Research Working Paper Series, The World Bank 5763, The World Bank.
  5. Chris Elbers & Jean O. Lanjouw & Peter Lanjouw, 2003. "Micro--Level Estimation of Poverty and Inequality," Econometrica, Econometric Society, Econometric Society, vol. 71(1), pages 355-364, January.
  6. Papyrakis, Elissaios & Gerlagh, Reyer, 2004. "The resource curse hypothesis and its transmission channels," Journal of Comparative Economics, Elsevier, Elsevier, vol. 32(1), pages 181-193, March.
  7. Carolyn Heinrich & Alessandro Maffioli & Gonzalo Vázquez, 2010. "A Primer for Applying Propensity-Score Matching," SPD Working Papers, Inter-American Development Bank, Office of Strategic Planning and Development Effectiveness (SPD) 1005, Inter-American Development Bank, Office of Strategic Planning and Development Effectiveness (SPD).
  8. Thorvaldur Gylfason, 2001. "Nature, Power, and Growth," CESifo Working Paper Series, CESifo Group Munich 413, CESifo Group Munich.
  9. Imbens, Guido W. & Wooldridge, Jeffrey M., 2008. "Recent Developments in the Econometrics of Program Evaluation," IZA Discussion Papers, Institute for the Study of Labor (IZA) 3640, Institute for the Study of Labor (IZA).
  10. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers, Harvard - Institute for International Development 517a, Harvard - Institute for International Development.
  11. Fernando M. Arag?n & Juan Pablo Rud, 2013. "Natural Resources and Local Communities: Evidence from a Peruvian Gold Mine," American Economic Journal: Economic Policy, American Economic Association, American Economic Association, vol. 5(2), pages 1-25, May.
  12. Tobias Kronenberg, 2004. "The curse of natural resources in the transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 12(3), pages 399-426, 09.
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