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Poverty, Inequality, and the Local Natural Resource Curse

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  • Loayza, Norman

    ()
    (World Bank)

  • Mier y Teran, Alfredo

    ()
    (University of California, Los Angeles)

  • Rigolini, Jamele

    ()
    (World Bank)

Abstract

The extent to which local communities benefit from commodity booms has been subject to wide but inconclusive investigations. This paper draws from a new district-level database to investigate the local impact on socioeconomic outcomes of mining activity in Peru, which grew almost twentyfold in the last two decades. We find evidence that producing districts have better average living standards than otherwise similar districts: larger household consumption, lower poverty rate, and higher literacy. However, the positive impacts from mining decrease significantly with administrative and geographic distance from the mine, while district-level consumption inequality increases in all districts belonging to a producing province. The inequalizing impact of mining activity, both across and within districts, may explain part of the current social discontent with mining activities in the country, even despite its enormous revenues.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7226.

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Length: 30 pages
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7226

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Keywords: natural resource curse; poverty; inequality; living standards;

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  1. Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, American Economic Association, vol. 5(1), pages 208-38, January.
  2. Javier Arellano-Yanguas, 2011. "Aggravating the Resource Curse: Decentralisation, Mining and Conflict in Peru," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 47(4), pages 617-638.
  3. Brollo, Fernanda & Nannicini, Tommaso & Perotti, Roberto & Tabellini, Guido, 2010. "The Political Resource Curse," IZA Discussion Papers 4706, Institute for the Study of Labor (IZA).
  4. Guy Michaels, 2011. "The Long Term Consequences of Resourceā€Based Specialisation," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 121(551), pages 31-57, March.
  5. Paul Collier & Benedikt Goderis, 2007. "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," Economics Series Working Papers, University of Oxford, Department of Economics WPS/2007-15, University of Oxford, Department of Economics.
  6. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, Elsevier, vol. 45(4-6), pages 827-838, May.
  7. 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 5763, The World Bank.
  8. Leonith Hinojosa, 2011. "Riqueza Mineral Y Pobreza En Los Andes," The European Journal of Development Research, Palgrave Macmillan, Palgrave Macmillan, vol. 23(3), pages 488-504, July.
  9. Raddatz, Claudio, 2005. "Are external shocks responsible for the instability of output in low income countries?," Policy Research Working Paper Series 3680, The World Bank.
  10. Oeindrila Dube & Juan F. Vargas, 2013. "Commodity Price Shocks and Civil Conflict: Evidence from Colombia," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1384-1421.
  11. Fernando M. Aragon & Juan Pablo Rud, 2010. "Natural Resources and Local Economic Development: Evidence from a Peruvian Gold Mine," Discussion Papers dp10-04, Department of Economics, Simon Fraser University.
  12. Frederick Van der Ploeg, 2010. "Natural Resources: Curse or Blessing?," CESifo Working Paper Series 3125, CESifo Group Munich.
  13. Stephan Litschig, 2008. "Financing local development: Quasi-experimental evidence from municipalities in Brazil, 1980-1991," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 1142, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2012.
  14. World Bank & Inter-American Development Bank, 2003. "Restoring Fiscal Discipline for Poverty Reduction in Peru : A Public Expenditure Review," World Bank Publications, The World Bank, number 15118, August.
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