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Poverty, inequality, and the local natural resource curse

  • Loayza, Norman
  • Mier y Teran, Alfredo
  • Rigolini, Jamele

The extent to which local communities benefit from commodity booms has been subject to wide but inconclusive investigations. This paper draws from a new district-level database to investigate the local impact on socioeconomic outcomes of mining activity in Peru, which grew almost twentyfold in the last two decades. The authors find evidence that producing districts have better average living standards than otherwise similar districts: larger household consumption, lower poverty rate, and higher literacy. However, the positive impacts from mining decrease significantly with administrative and geographic distance from the mine, while district-level consumption inequality increases in all districts belonging to a producing province. The inequalizing impact of mining activity, both across and within districts, may explain part of the current social discontent with mining activities in the country, even despite its enormous revenues.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6366.

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Date of creation: 01 Feb 2013
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Handle: RePEc:wbk:wbrwps:6366
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  1. Frederick Van der Ploeg, 2010. "Natural Resources: Curse or Blessing?," CESifo Working Paper Series 3125, CESifo Group Munich.
  2. Leonith Hinojosa, 2011. "Riqueza Mineral Y Pobreza En Los Andes," The European Journal of Development Research, Palgrave Macmillan, vol. 23(3), pages 488-504, July.
  3. Raddatz, Claudio, 2007. "Are external shocks responsible for the instability of output in low-income countries?," Journal of Development Economics, Elsevier, vol. 84(1), pages 155-187, September.
  4. Loayza, Norman V. & Rigolini, Jamele & Calvo-Gonzalez, Oscar, 2011. "More than you can handle : decentralization and spending ability of Peruvian municipalities," Policy Research Working Paper Series 5763, The World Bank.
  5. Fernanda Brollo & Tommaso Nannicini & Roberto Perotti & Guido Tabellini, 2010. "The Political Resource Curse," NBER Working Papers 15705, National Bureau of Economic Research, Inc.
  6. Francesco Caselli & Guy Michaels, 2013. "Do oil windfalls improve living standards?: evidence from Brazil," LSE Research Online Documents on Economics 48086, London School of Economics and Political Science, LSE Library.
  7. Paul Collier & Benedikt Goderis, 2007. "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," Economics Series Working Papers WPS/2007-15, University of Oxford, Department of Economics.
  8. Guy Michaels, 2011. "The Long Term Consequences of Resource‐Based Specialisation," Economic Journal, Royal Economic Society, vol. 121(551), pages 31-57, March.
  9. Oeindrila Dube & Juan F. Vargas, 2013. "Commodity Price Shocks and Civil Conflict: Evidence from Colombia," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1384-1421.
  10. Javier Arellano-Yanguas, 2011. "Aggravating the Resource Curse: Decentralisation, Mining and Conflict in Peru," Journal of Development Studies, Taylor & Francis Journals, vol. 47(4), pages 617-638.
  11. World Bank & Inter-American Development Bank, 2003. "Restoring Fiscal Discipline for Poverty Reduction in Peru : A Public Expenditure Review," World Bank Publications, The World Bank, number 15118, December.
  12. Stephan Litschig, 2008. "Financing local development: Quasi-experimental evidence from municipalities in Brazil, 1980-1991," Economics Working Papers 1142, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2012.
  13. Fernando M. Aragon & Juan Pablo Rud, 2010. "Natural Resources and Local Economic Development: Evidence from a Peruvian Gold Mine," Discussion Papers dp10-04, Department of Economics, Simon Fraser University.
  14. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
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