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The Blessing of Natural Resources: Evidence from a Peruvian Gold Mine

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Author Info

  • Aragon, Fernando

    (London School of Economics and Political Science)

  • Rud, Juan

    (University of London)

Abstract

This paper studies the impact of Yanacocha, a large gold mine in Peru, on the local population. Using annual household data from 1997 to 2006, we nd robust evidence of a positive effect of the mine's demand of local inputs on real income. The effect, an average income increase of 1.7% per 10% additional mine's purchases, is only present in the mine's supply market and surrounding areas. We also nd evidence of improvements on measures of welfare and reduction of poverty. We examine and rule out that our results are driven by increased public expenditure associated to the mining revenue windfall. Using a spatial general equilibrium model, we interpret these results as evidence of net welfare gains generated by the mine's backward linkages and its multiplier effect.

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Bibliographic Info

Paper provided by Banco Central de Reserva del Perú in its series Working Papers with number 2009-014.

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Date of creation: Dec 2009
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Handle: RePEc:rbp:wpaper:2009-015

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Keywords: Natural resources; mining; local development;

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References

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  1. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
  2. Sandra E. Black, 1997. "Do better schools matter? Parental valuation of elementary education," Research Paper 9729, Federal Reserve Bank of New York.
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  6. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
  7. Juana R. Kuramoto, 2000. "Las aglomeraciones productivas alrededor de la minería: el caso de la minera Yanacocha S.A," Documentos de Investigación dt27, Grupo de Análisis para el Desarrollo (GRADE).
  8. Michael Greenstone & Enrico Moretti, 2003. "Bidding for Industrial Plants: Does Winning a 'Million Dollar Plant' Increase Welfare?," NBER Working Papers 9844, National Bureau of Economic Research, Inc.
  9. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
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  11. Michaels, Guy, 2006. "The Long-Term Consequences of Regional Specialization," CEPR Discussion Papers 6028, C.E.P.R. Discussion Papers.
  12. William N. Evans & Julie H. Topoleski, 2002. "The Social and Economic Impact of Native American Casinos," NBER Working Papers 9198, National Bureau of Economic Research, Inc.
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Cited by:
  1. Raveh, Ohad, 2010. "Dutch Disease, Factor Mobility Costs, and the ‘Alberta Effect’ – The Case of Federations," MPRA Paper 29662, University Library of Munich, Germany.
  2. Mathieu Couttenier & Marc Sangnier, 2010. "Living in the garden of Eden: Mineral resources foster individualism," PSE Working Papers halshs-00564920, HAL.
  3. Raveh, Ohad, 2010. "Dutch disease, factor mobility costs, and the ‘Alberta Effect’ – The case of Federations," MPRA Paper 31744, University Library of Munich, Germany, revised Jun 2011.

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