Gold mining and proto-urbanization: recent evidence from Ghana

Abstract

Central place theory predicts that agglomeration can arise from external shocks. We investigate whether gold mining is a catalyst for early stages of urbanization in rural Ghana. We call this phenomenon proto-urbanization. Using cross-sectional data, we find that locations with gold mines exhibit most of the telltale signs of proto-urbanization. They have higher population densities, and they are also sites where more sophisticated forms of economic activity agglomerate. These findings are consistent with agglomeration effects that induce non-farm activities to coalesce in a particular location. Over time, we find that an increase in gold production is associated with more specialization, but not with a clear sectoral transformation of employment. We also find that the changes arising from increasing gold production are not reversed when large gold mines shrink. Rather, they continue to become more consistent with processes of structural transformation. * We would like to express our sincere thanks to Dr. Phylomena Nyarko of Ghana Statistical Services for making the census data (10 percent sample) available to us, and to Mrs. Jacqueline Anum and Harold Coulombe for their generous help with the data. We would also like to thank Ryan Engstrom and Richard Hinton from George Washington University, and Brian Blankespoor from the World Bank for their assistance with various GIS data. We benefited from comments and suggestions from an anonymous referee,

The local socioeconomic effects of gold mining: Evidence from Ghana

“…The nonmigrant analysis can plausibly reflect similar households over time, with the limitation of selective outward migration. We believe inward migration to mining areas to be more common than outward migration (in line with Fafchamps et al, 2016).…”

The gold digger and the machine. Evidence on the distributive effect of the artisanal and industrial gold rushes in Burkina Faso

“…One possible explanation of our results is that the gold boom induced migration (Fafchamps et al, 2017).…”

Mining and Local Economies: Dilemma between Environmental Protection and Job Opportunities

“…Empirical research has made greater progress in the study of the three channels, but there is still less of an advance in our understanding of how the environmental and channels interact with each other. Indeed, many studies have investigated a large spectrum of the local socioeconomic impact of the mining sector: local economic growth, agglomeration economies, demand shock, and multiplier effects on other sectors [11,[33][34][35][36], local output and employment composition ( [11,37]), local corruption and violence ( [38][39][40][41]), living standards, poverty, and inequality, [11,35,[42][43][44], and local public spending and services [45]. At the same time, a literature stream on the impact of mining on the local environment is emerging.…”