Intensive and extensive margins of mining and development: Evidence from Sub-Saharan Africa

Abstract

What are the economic consequences of mining in Sub-Saharan Africa? Using a panel of 3,635 districts from 42 Sub-Saharan African countries for the period 1992 to 2012 we investigate the effects of mining on living standards measured by night-lights.Night-lights increase in mining districts when mineral production expands (intensive margin), but large effects approximately equivalent to 16% increase in GDP are mainly associated with new discoveries and new production (extensive margin). We identify the effect by carefully choosing feasible but not yet mined districts as a control group. In addition, we exploit giant and major mineral discoveries as exogenous news shocks. In spite of the within district large effects, there is little evidence of significant spillovers to other districts reinforcing the enclave nature of mines in Africa.Furthermore, the local effects disappear after mining activities come to an end which is consistent with the 'resource curse' view.JEL classification: O11, O13, Q32

Mining and the Quality of Public Services : The Role of Local Governance and Decentralization

“…For instance, using a large sample that covers more than 3,600 districts across 42 African countries, Mamo et al (2019) show that mining has a positive impact on local economic activity measured by night-lights density but mixed effects on living standards and public services provision. The study by Chuhan-Pole et al (2015) also confirms the positive impact of mines on economic activity in Ghana.…”

“…As a result, recent publications set forth empirical estimates on the effects of mining on local development indicators such as health, wealth, poverty, and inequality (Loayza and Rigolini, 2016;Goltz and Barnwal, 2019). In Africa more particularly recent contributions have also shed light on the local effects of mining on economic activity and public service delivery (Mamo et al, 2019), on socio-economic indicators (Kotsadam and Tolonen, 2016;Benshaul-Tolonen, 2019) and local conflict and corruption (Lujala, 2010;Maystadt et al, 2013;Berman et al, 2017).…”

The local socioeconomic effects of gold mining: Evidence from Ghana

“…Moreover, some of the mining-related papers have focused on mining in an African context, exploring a range of outcomes, including HIV-transmission and sexual risk taking (Corno and de Walque 2012;Wilson 2012), women's empowerment (Benshaul-Tolonen 2018), infant mortality (Benshaul-Tolonen, 2019) and labor market outcomes (Kotsadam and Tolonen 2016). Mining is also associated with more economic activity measured by nightlights (Benshaul-Tolonen, 2019;Mamo et al, 2019). Kotsadam and Tolonen (2016) use DHS data from Africa, and find that mine openings cause women to shift from agriculture to service production and that women become more likely to work for cash and year-round as opposed to seasonally.…”

Spatial Diffusion of Economic Shocks in Networks

“…A notable exception is Aragon and Rud's (2013) study on the spillovers from a large gold mine in Peru. Closer to us, Mamo et al (2017) look at spatial spillovers from mine discoveries in Africa. They find little evidence for spatial spillovers.…”

“…At a more general level, we relate to the growing number of empirical studies analyzing the differences in economic development between and within subnational units rather than countries (e.g., Gennaioli et al, 2014, Henderson et al, 2018, Michalopoulos and Papaioannou, 2017, and some of the studies cited above). Within this strand of literature, a few studies investigate the role of spatial spillovers on regoinal development using spatial econometric techniques (e.g., Crespo-Cuaresma et al, 2014, Higgins et al, 2006, Mamo et al, 2017. A common problem in this context is the potential endogeneity of the spatial lag variable.…”