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

Fernando Aragon and Juan Rud
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Juan Rud: University of London

No 2009-014, Working Papers from Banco Central de Reserva del Perú

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.

Keywords: Natural resources; mining; local development (search for similar items in EconPapers)
JEL-codes: O13 O18 Q32 Q33 R20 (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-dev and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:rbp:wpaper:2009-015

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