Mining booms' effects: How booms from mining sector affect firms' performances

Manegdo Ulrich Doamba ()
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Manegdo Ulrich Doamba: LEO - Laboratoire d'Économie d'Orleans [2022-...] - UO - Université d'Orléans - UT - Université de Tours - UCA - Université Clermont Auvergne

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Abstract: Mining activities currently capitalize on the energy transition that fuels the demand for ores. However, the macroeconomics literature has extensively documented the adverse effects of booming sectors on the other sectors of the economy. This study uses firm-level data to examine the effects of mine activation on firm performance in developing countries. Drawing from the Dutch disease and the resource curse literature, we examine whether mining activities affect the manufacturing sector using a multilevel mixed model. We build an original dataset that merges data from the World Bank Enterprise Surveys data and the Minex database on mining activities. The dataset leaves us with a sample of 15,642 firms disseminated in 44 developing countries from 2006 to 2020. The results show that manufacturing firms underperform when mining activities grow, thus supporting the Dutch disease hypothesis. Our main finding is robust to several checks. We examine various transmission channels provided by the Dutch disease literature: competitiveness losses induced by the exchange rate appreciation, poor institutional quality, and labor force shifts. Our results highlight the potential conflict between energy transition and firm performance.

Keywords: Resource booms; Dutch disease; Developing countries; Manufacturing firm performance; Mixed Multilevel Model (search for similar items in EconPapers)
Date: 2024-05-27
Note: View the original document on HAL open archive server: https://hal.science/hal-04588824
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