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Spill-Overs of a Resource Boom: Evidence from Zambian Copper Mines

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  • Alexander Lippert

Abstract

Do local populations bene t from resource booms? How strong are market linkages between the mining sector and the regional economy? This paper exploits exogenous variation in mine-level pro duction volumes generated by the recent copper boom in Zambia to shed light on these questions.Using a novel dataset, I nd robust evidence that an increase in local copper production improves living standards in the surroundings of the mines even for households not directly employed in the mining sector: a 10% increase in constituency-level copper output is associated with a 2% increase in real household expenditure; positive e ects on housing conditions, consumer durable ownership and child health are of similar magnitude. The positive spill-overs extend to the rural hinterland of mining cities, neighboring constituencies, and constituencies on the copper transportation route. Additionally,I identify boom-induced changes in the demand for services and agricultural products as key channels through which the urban and rural populations bene t from the mine expansions. Since the boom failed to generate scal revenues, these e ects can be interpreted as the result of the mines' backward linkages. Taken together, these ndings highlight the welfare potential of local procurement policies in resource rich developing countries.

Suggested Citation

  • Alexander Lippert, 2014. "Spill-Overs of a Resource Boom: Evidence from Zambian Copper Mines," OxCarre Working Papers 131, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  • Handle: RePEc:oxf:oxcrwp:131
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    File URL: http://www.oxcarre.ox.ac.uk/files/OxCarreRP2014131.pdf
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    References listed on IDEAS

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    Cited by:

    1. Nemera Mamo & Sambit Bhattacharyya & Alexander Moradi & Rabah Arezki, 2017. "Intensive and Extensive Margins of Mining and Development: Evidence from Sub-Saharan Africa," Working Paper Series 0517, Department of Economics, University of Sussex.
    2. repec:eee:chieco:v:47:y:2018:i:c:p:65-76 is not listed on IDEAS
    3. Macatangay, Rafael Emmanuel “Manny”, 2016. "Optimal local content requirement policies for extractive industries," Resources Policy, Elsevier, vol. 50(C), pages 244-252.

    More about this item

    Keywords

    Commodity Shocks; Local Development; Mining; Natural Resources;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • 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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