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

  • Alexander Lippert
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    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.

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    File URL: http://www.oxcarre.ox.ac.uk/files/OxCarreRP2014131.pdf
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    Paper provided by Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford in its series OxCarre Working Papers with number 131.

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    Date of creation: 2014
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    Handle: RePEc:oxf:oxcrwp:131
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