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The long-term impact of a resource-based fiscal windfall: evidence from the Peruvian canon

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This paper examines the long-term impact of the canon, a resource-based transfer, on local living conditions in Peruvian municipalities. We use the most recent data and several identification strategies with cross-section and panel data. We find no evidence of significant improvements in access to public services, poverty, or inequality. This negligible impact occurs, even though we do observe sizable increases in municipalities’ revenue, personnel, and equipment. We only observe some suggestive, albeit weak, evidence of increased infrastructure projects in local areas, such as the construction and repair of urban roads.

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  • Fernando M. Aragon, Hernan Winkler, 2023. "The long-term impact of a resource-based fiscal windfall: evidence from the Peruvian canon," Discussion Papers dp23-09, Department of Economics, Simon Fraser University.
    • Handle: RePEc:sfu:sfudps:dp23-09
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    1. Paredes, Dusan & Rivera, Nathaly M., 2017. "Mineral taxes and the local public goods provision in mining communities," Resources Policy, Elsevier, vol. 53(C), pages 328-339.
    2. Loayza, Norman & Rigolini, Jamele, 2016. "The Local Impact of Mining on Poverty and Inequality: Evidence from the Commodity Boom in Peru," World Development, Elsevier, vol. 84(C), pages 219-234.
    3. Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, November.
    4. Hristos Doucouliagos & Martin Paldam, 2009. "The Aid Effectiveness Literature: The Sad Results Of 40 Years Of Research," Journal of Economic Surveys, Wiley Blackwell, vol. 23(3), pages 433-461, July.
    5. Faguet, Jean-Paul, 2004. "Does decentralization increase government responsiveness to local needs?: Evidence from Bolivia," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 867-893, March.
    6. Matthias Busse & Steffen Gröning, 2013. "The resource curse revisited: governance and natural resources," Public Choice, Springer, vol. 154(1), pages 1-20, January.
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    1. Beach, Andrew & Raimi, Daniel, 2025. "Critical Revenues: How Might Mining for Critical Minerals Contribute to Local Government Budgets in the United States?," RFF Working Paper Series 25-29, Resources for the Future.

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