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The Blessing of Natural Resources: Evidence from a Peruvian Gold Mine

Author

Listed:
  • Aragon, Fernando

    (London School of Economics and Political Science)

  • Rud, Juan

    (University of London)

Abstract

This paper studies the impact of Yanacocha, a large gold mine in Peru, on the local population. Using annual household data from 1997 to 2006, we find robust evidence of a positive effect of the mine's demand of local inputs on real income. The effect, an average income increase of 1.7% per 10% additional mine's purchases, is only present in the mine's supply market and surrounding areas. We also find evidence of improvements on measures of welfare and reduction of poverty. We examine and rule out that our results are driven by increased public expenditure associated to the mining revenue windfall. Using a spatial general equilibrium model, we interpret these results as evidence of net welfare gains generated by the mine's backward linkages and its multiplier effect.

Suggested Citation

  • Aragon, Fernando & Rud, Juan, 2009. "The Blessing of Natural Resources: Evidence from a Peruvian Gold Mine," Working Papers 2009-014, Banco Central de Reserva del Perú.
    • Handle: RePEc:rbp:wpaper:2009-015
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    Cited by:

    1. Mathieu Couttenier & Marc Sangnier, 2010. "Living in the garden of Eden: Mineral resources foster individualism," PSE Working Papers halshs-00564920, HAL.
    2. Couttenier, Mathieu & Sangnier, Marc, 2015. "Living in the Garden of Eden: Mineral resources and preferences for redistribution," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 243-256.
    3. Raveh, Ohad, 2010. "Dutch disease, factor mobility costs, and the ‘Alberta Effect’ – The case of Federations," MPRA Paper 31744, University Library of Munich, Germany, revised Jun 2011.
    4. James CUST & Ridwan D. RUSLI, 2014. "The economic spillovers from resource extraction: a partial resource blessing at the subnational level?," Economic Growth Centre Working Paper Series 1402, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    5. Dakshina G. De Silva & Robert P. McComb & Anita R. Schiller, 2016. "What Blows in with the Wind?," Southern Economic Journal, John Wiley & Sons, vol. 82(3), pages 826-858, January.
    6. Idrobo Nicolás & Mejía Daniel & Tribin Ana María, 2014. "Illegal Gold Mining and Violence in Colombia," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(1), pages 83-111, January.
    7. de la Torre, Augusto & Didier, Tatiana & Pinat, Magali, 2014. "Can Latin America tap the globalization upside ?," Policy Research Working Paper Series 6837, The World Bank.

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    More about this item

    Keywords

    Natural resources; mining; local development;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • 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)
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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