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The Local Economic Impacts of Natural Resource Extraction

Author

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  • James Cust

    () (Oxford Centre for the Analysis of Resource Rich Economies (OxCarre), Department of Economics, University of Oxford, Oxford OX1 3UQ, United Kingdom
    Natural Resource Governance Institute, New York, NY 10004)

  • Steven Poelhekke

    () (Oxford Centre for the Analysis of Resource Rich Economies (OxCarre), Department of Economics, University of Oxford, Oxford OX1 3UQ, United Kingdom
    Faculty of Economics and Business Administration and Tinbergen Institute, VU University Amsterdam, 1081 HV Amsterdam, The Netherlands
    De Nederlandsche Bank, 1017 ZN Amsterdam, The Netherlands)

Abstract

Whether it is fair to characterize natural resource wealth as a curse is still debated. Most of the evidence derives from cross-country analyses, providing cases both for and against a potential resource curse. Scholars are increasingly turning to within-country evidence to deepen our understanding of the potential drivers, and outcomes, of resource wealth effects. Moving away from cross-country studies offers new perspectives on the resource curse debate and can help overcome concerns regarding endogeneity. Therefore, scholars are leveraging datasets that provide greater disaggregation of economic responses and exogenous identification of impacts. This article surveys the literature on these studies of local and regional effects of natural resource extraction. We discuss data availability and quality, recent advances in methodological tools, and the main findings of several research areas. These areas include the direct impact of natural resource production on local labor markets and welfare, the effects of government spending channels resulting from mining revenue, and regional spillovers. Finally, we take stock of the state of the literature and provide suggestions for future research.

Suggested Citation

  • James Cust & Steven Poelhekke, 2015. "The Local Economic Impacts of Natural Resource Extraction," Annual Review of Resource Economics, Annual Reviews, vol. 7(1), pages 251-268, October.
  • Handle: RePEc:anr:reseco:v:7:y:2015:p:251-268
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-resource-100814-125106
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    Keywords

    survey; mining; Dutch disease; identification; spillovers;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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