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Natural Resources and Local Economic Development: Evidence from a Peruvian Gold Mine

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Abstract

This paper uses the case of Yanacocha, a large gold mine in Peru, to examine the link between natural resources and local economic development. We find evidence of a positive and sizeable effect of the mine on real income, household consumption and poverty reduction. The effects are driven by the mine's demand of local inputs, not by the expansion of local public spending or by compensating differentials for negative spillovers. Using a spatial general equilibrium model, we interpret these results as evidence of economic gains generated by the mine's backward linkages.

Suggested Citation

  • 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.
    • Handle: RePEc:sfu:sfudps:dp10-04
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    1. Francesco Caselli & Guy Michaels, 2013. "Do Oil Windfalls Improve Living Standards? Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 5(1), pages 208-238, January.
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    More about this item

    Keywords

    natural resources; mining local development.;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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