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Natural Resources and Local Communities: Evidence from a Peruvian Gold Mine

Listed author(s):
  • Fernando M. Arag?n
  • Juan Pablo Rud

This paper examines the local economic impact of Yanacocha, a large gold mine in Northern Peru. Using annual household data from 1997 to 2006, we find evidence of a positive effect of the mine?s demand for local inputs on real income. The effects are only present in the supply market and surrounding areas, and reach unskilled workers in non-mining sectors. Consistent with a general equilibrium framework, we also find an increase in the local price of nontradable goods. Taken together, our results underline the potential of backward linkages from extractive industries to create positive spillovers in less developed economies. (JEL L72, O13, O18, Q32, Q33, R11)

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Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 5 (2013)
Issue (Month): 2 (May)
Pages: 1-25

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Handle: RePEc:aea:aejpol:v:5:y:2013:i:2:p:1-25
Note: DOI: 10.1257/pol.5.2.1
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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.
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  11. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
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  13. Guy Michaels, 2006. "The Long-Term Consequences of Regional Specialization," CEP Discussion Papers dp0766, Centre for Economic Performance, LSE.
  14. 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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