Spillovers from extractive industries

Bruno Morando, Carol Newman and John Rand
May 2020

Extractive industries form an important part of the economy for many developing countries, yet evidence suggests that having an abundance of resources does not necessarily translate into higher living standards. In particular, little is known about the effect of the extractive industries on local communities. Our aim is to provide new empirical evidence of the impact of mining on firms and workers located in the vicinity of the mines. We consider five potential local market effects of mining: 1) the impact on labour markets; 2) the impact on the demand for local inputs; 3) price transmission effects; 4) the impact on R&D and innovation; and 5) political economy effects. Using data from South Africa, in this paper, we will focus on one of these areas with future papers exploring the other possible effects.

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