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Mining and Local Corruption in Africa

Author

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  • Kotsadam, Andreas

    () (Dept. of Economics, University of Oslo)

  • Olsen, Eivind Hammersmark

    () (Dept. of Economics, University of Oslo)

  • Knutsen, Carl Henrik

    (Department of Political Science, University of Oslo)

  • Wig, Tore

    (Department of Political Science, University of Oslo)

Abstract

We investigate whether mining affects local-level corruption in Africa. Several cross-country analyses report that natural resource production and wealth have adverse effects on political institutions, for instance by increasing corruption, whereas other country-level studies show no evidence of such "political resource curses". These studies face well-known endogeneity and other methodological issues, and employing alternative designs and micro-level data would allow for drawing stronger inferences. Hence, we connect 90,000 survey respondents in four Afrobarometer survey waves to spatial data on about 500 industrial mines. Using a difference-in-differences strategy, we find evidence that mining increases bribe payments. Mines are initially located in less corrupt areas, but mining areas turn more corrupt after mines open and actively produce. A closer study of South Africa - using even more precise spatial matching of mines and survey respondents - corroborates the continent-wide results. Hence, mineral production is, indeed, a "curse" to local institutions.

Suggested Citation

  • Kotsadam, Andreas & Olsen, Eivind Hammersmark & Knutsen, Carl Henrik & Wig, Tore, 2015. "Mining and Local Corruption in Africa," Memorandum 09/2015, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2015_009
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    References listed on IDEAS

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    1. repec:aea:aecrev:v:107:y:2017:i:6:p:1564-1610 is not listed on IDEAS
    2. Isaksson, Ann-Sofie & Kotsadam, Andreas, 2018. "Chinese aid and local corruption," Journal of Public Economics, Elsevier, vol. 159(C), pages 146-159.
    3. Nicolas Berman & Mathieu Couttenier & Dominic Rohner & Mathias Thoenig, 2017. "This Mine Is Mine! How Minerals Fuel Conflicts in Africa," American Economic Review, American Economic Association, vol. 107(6), pages 1564-1610, June.
    4. Merima Ali & Odd-Helge Fjeldstad & Boqian Jiang & Abdulaziz B. Shifaz, 2015. "Colonial legacy, state-building and the salience of ethnicity in Sub-Saharan Africa," CMI Working Papers 16, CMI (Chr. Michelsen Institute), Bergen, Norway.
    5. Kotsadam, Andreas & Tolonen, Anja, 2016. "African Mining, Gender, and Local Employment," World Development, Elsevier, vol. 83(C), pages 325-339.
    6. Ahlerup, Pelle & Baskaran, Thushyanthan & Bigsten, Arne, 2016. "Gold mining and education: a long-run resource curse in Africa?," Working Papers in Economics 666, University of Gothenburg, Department of Economics, revised Mar 2017.

    More about this item

    Keywords

    Resource curse; corruption; minerals; mining;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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