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The Local Economic Impact of Mineral Mining in Africa: Evidence from Four Decades of Satellite Imagery

Sandro Provenzano and Hannah Bull

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Abstract: Mining projects often gain support from communities through promises of benefits to the local economy, though the empirical evidence is mixed: mineral assets are advantageous in some circumstances but lead to corruption and violence in others. To shed light on this apparent discrepancy, we significantly extend the coverage of previous work in this area by gathering satellite data that spans several decades and encompasses several institutional environments. Our dataset consists of one million 30m-resolution Landsat images between 1984 and 2019 from a 40km radius around 1,658 mineral deposits across the continent. Using state-of-the-art techniques in computer vision, we translate these images into economically meaningful indicators measuring urban growth and material wealth. We then use stacked event studies and difference-in-difference models to estimate the impact of mine openings and closings. We find strong evidence of a political resource curse at the local level. Although mining boosts the local economy in democratic countries, these gains are meagre in autocracies and come at the expense of an increase in localized conflict. Furthermore, our results show that the growth acceleration in mining areas is only temporary. While former mining areas maintain their increased wealth and urban size with respect to non-mining areas, there is no sustained divergence.

Date: 2021-11, Revised 2022-08
New Economics Papers: this item is included in nep-big, nep-dev and nep-ure
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Handle: RePEc:arx:papers:2111.05783