Hostname: page-component-848d4c4894-5nwft Total loading time: 0 Render date: 2024-05-13T17:43:10.062Z Has data issue: false hasContentIssue false
  • English
  • Français

Fading local effects: boom and bust evidence from a Peruvian gold mine

Published online by Cambridge University Press:  18 October 2019

José Carlos Orihuela Open the ORCID record for José Carlos Orihuela [Opens in a new window]  and
Victor Gamarra-Echenique
José Carlos Orihuela*
Affiliation:
Department of Economics, Pontificia Universidad Católica del Perú (PUCP), Lima, Perú
Victor Gamarra-Echenique
Affiliation:
Department of Economics, Pontificia Universidad Católica del Perú (PUCP), Lima, Perú
*
*Corresponding author. E-mail: orihuela.jc@pucp.pe
Get access Rights & Permissions [Opens in a new window]

Abstract

The local effects of mining might simply come and go with mine production. In this paper we revisit Aragón and Rud's (2013) study of the Yanacocha mine, frequently cited to account for local economic effects and backward linkages, but we offer a more nuanced interpretation: first, effects fade with the mine exhaustion; and second, impacts are the result of consumption boom-and-bust dynamics. While we find it more conceptually accurate to reserve the concept of backward linkages for effects of a productive nature, our evidence reveals that unskilled services is the one sector that benefits, in contrast to manufactures and skilled services. We stress that impact evaluations of mines are contingent to time and place, and contend that exploring the extent to which multipliers generate spillovers is central. The short-run effects of a mine might in fact give little indication of how to tell or make a blessing from a curse.

Keywords

demand shockfiscal windfalllinkageslocal effectsresource curse
Type
Research Article
Information
Environment and Development Economics , Volume 25 , Issue 2 , April 2020 , pp. 182 - 203
Copyright
Copyright © Cambridge University Press 2019

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Allcott, H and Keniston, D (2018) Dutch disease or agglomeration? The local economic effects of natural resource booms in modern America. The Review of Economic Studies 85, 695–731.CrossRefGoogle Scholar
Aragón, FM and Rud, JP (2013) Natural resources and local communities: evidence from a Peruvian gold mine. American Economic Journal: Economic Policy 5, 1–25.Google Scholar
Aragón, FM, Rud, JP and Toews, G (2018) Resource shocks, employment, and gender: evidence from the collapse of the UK coal industry. Labour Economics 52, 54–67.CrossRefGoogle Scholar
Arellano-Yanguas, J (2011) Aggravating the resource curse: decentralisation, mining and conflict in Peru. The Journal of Development Studies 47, 617–638.CrossRefGoogle Scholar
Arias, M, Atienza, M and Cademartori, J (2014) Large mining enterprises and regional development in Chile: between the enclave and cluster. Journal of Economic Geography 14, 73–95.CrossRefGoogle Scholar
Atienza, M, Aroca, P, Stimson, R and Stough, R (2016) Are vertical linkages promoting the creation of a mining cluster in Chile? An analysis of the SMEs’ practices along the supply chain. Environment and Planning C: Government and Policy 34, 171–187.CrossRefGoogle Scholar
Atkinson, G and Hamilton, K (2003) Savings, growth and the resource curse hypothesis. World Development 31, 1793–1807.CrossRefGoogle Scholar
Bjørnland, HC and Thorsrud, LA (2016) Boom or gloom? Examining the Dutch disease in two-speed economies. The Economic Journal 126, 2219–2256.CrossRefGoogle Scholar
Bloch, R and Owusu, G (2012) Linkages in Ghana's gold mining industry: challenging the enclave thesis. Resources Policy 37, 434–442.CrossRefGoogle Scholar
Bury, J (2005) Mining mountains: neoliberalism, land tenure, livelihoods, and the new Peruvian mining industry in Cajamarca. Environment and Planning A 37, 221–239.CrossRefGoogle Scholar
Cardoso, FH and Faletto, E (1970) Dependência e Desenvolvimento na América Latina: Ensaio de Interpretação Sociológica. Rio de Janeiro: Zahar Editores (in Portuguese).Google Scholar
Contreras, C (1995) Los mineros y el rey: los andes del norte: Hualgayoc 1770–1825. Lima, Peru: Instituto de Estudios Peruanos (in Spanish).Google Scholar
Corden, W and Neary, J (1982) Booming sector and de-industrialization in a small open economy. The Economic Journal 92, 825–848.CrossRefGoogle Scholar
Cust, J and Poelhekke, S (2015) The local economic impacts of natural resource extraction. Annual Review of Resources Economics 7, 251–268.CrossRefGoogle Scholar
Hartwick, JM (1977) Intergenerational equity and the investing of rents from exhaustible resources. American Economic Review 67, 972–974.Google Scholar
Hausmann, R, Hwang, J and Rodrik, D (2007) What you export matters. Journal of Economic Growth 12, 1–25.CrossRefGoogle Scholar
Hirschman, AO (1958) The Strategy of Economic Development. New Haven, CT: Yale University Press.Google Scholar
Hirschman, AO (1981) Essays in Trespassing: Economics to Politics and Beyond. New York: Cambridge University Press.Google Scholar
Hoff, K and Stiglitz, JE (2001) Modern economic theory and development. In Meier, GM and Stiglitz, JE (eds). Frontiers of Development Economics: The Future in Perspective. Washington, DC: World Bank and New York: Oxford University Press, pp. 389–459.Google Scholar
Humphreys, M, Sachs, J and Stiglitz, J (eds) (2007) Escaping the Resource Curse. New York City: Columbia University Press.Google Scholar
INEI-ENAHO (2017) Encuesta Nacional de Hogares. Instituto Nacional de Estadística e Informática. Available at: https://www.inei.gob.pe/media/MenuRecursivo/boletines/01-informe-tecnico-n01_condiciones-de-vida-oct-nov-dic2016.pdf (in Spanish).Google Scholar
Innis, HA (1956) Essays in Canadian Economic History. Toronto: University of Toronto Press.Google Scholar
Jacobsen, GD and Parker, DP (2016) The economic aftermath of resource booms: evidence from boomtowns in the American West. The Economic Journal 126, 1092–1128.CrossRefGoogle Scholar
Jenkins, B, Ishikawa, E, Barthes, E and Giacomelli, M (2008) Supporting Entrepreneurship at the Base of the Pyramid Through Business Linkages. Report of a Roundtable Dialogue, 10–12 June 2008, Rio de Janeiro, Brazil. Washington, DC: International Finance Corporation, International Business Leaders Forum, and Kennedy School of Government, Harvard University.Google Scholar
Kotsadam, A and Tolonen, A (2016) African mining, gender, and local employment. World Development 83, 325–339.CrossRefGoogle Scholar
Kuramoto, J (1999) Las aglomeraciones productivas alrededor de la minería: el caso de la Minera Yanacocha, SA. Grupo de Análisis para el Desarrollo (GRADE) Documentos de Trabajo No 27 (in Spanish).Google Scholar
Loayza, N and Rigolini, J (2016) The local impact of mining on poverty and inequality: evidence from the commodity boom in Peru. World Development 84, 219–234.CrossRefGoogle Scholar
Manzano, O and Gutiérrez, JD (2019) The subnational resource curse: theory and evidence. The Extractive Industries and Society 6, 261–266.CrossRefGoogle Scholar
Michaels, G (2011) The long term consequences of resource-based specialisation. The Economic Journal 121, 31–57.CrossRefGoogle Scholar
MINEM (2017) Anuario Minero 2017. Ministerio de Energía y Minas. Available at http://www.minem.gob.pe/minem/archivos/file/Mineria/PUBLICACIONES/ANUARIOS/2017/ANUARIO%20MINERO%202017(1).pdf (in Spanish).Google Scholar
Molina, O (2018) Innovation in an unfavorable context: local mining suppliers in Peru. Resources Policy 58, 34–48.CrossRefGoogle Scholar
Moretti, E (2010) Local multipliers. American Economic Review 100, 373–377.CrossRefGoogle Scholar
Moretti, E (2011) Local labor markets. In Ashenfelter, O and Card, D (eds), Handbook of Labor Economics, vol. 4B. Amsterdam: Elsevier, pp. 1237–1313.Google Scholar
Morris, M, Kaplinsky, R and Kaplan, D (2012) “One thing leads to another” – commodities, linkages and industrial development. Resources Policy 37, 408–416.CrossRefGoogle Scholar
Orihuela, JC (2018) Institutions and place: bringing context back into the study of the resource curse. Journal of Institutional Economics 14, 157–180.CrossRefGoogle Scholar
Orihuela, JC and Gamarra, V (2019) Volatile and spatially varied: the geographically differentiated economic outcomes of resource-based development in Peru, 2001–2015. The Extractive Industries and Society, doi:10.1016/j.exis.2019.05.019.CrossRefGoogle Scholar
Orihuela, JC, Pérez, CA and Huaroto, C (2019) The local effects of mining in rural economies: evidence from the Peruvian Andes, 1994–2012. Unpublished working paper.Google Scholar
Phelps, NA, Atienza, M and Arias, M (2015) Encore for the enclave: the changing nature of the industry enclave with illustrations from the mining industry in Chile. Economic Geography 91, 119–146.CrossRefGoogle Scholar
Rodrik, D (2004) Industrial policy for the twenty-first century. Harvard Kennedy School of Government Working Paper No. RWP04-047. Available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=617544.CrossRefGoogle Scholar
Rodrik, D (2005) Growth strategies. In Aghion, P and Durlauf, S (eds), Handbook of Economic Growth, vol. 1A. Amsterdam: North-Holland, pp. 967–1014.Google Scholar
Singer, HW (1950) The distribution of gains between borrowing and investing countries. American Economic Review 40, 473–485.Google Scholar
Solow, RM (1986) On the intergenerational allocation of natural resources. The Scandinavian Journal of Economics 88, 141–149.CrossRefGoogle Scholar
Thorp, R and Bertram, G (1978) Peru 1890–1977: Growth and Policy in an Export Economy. London: Macmillan.CrossRefGoogle Scholar
Ticci, E and Escobal, J (2015) Extractive industries and local development in the Peruvian highlands. Environment and Development Economics 20, 101–126.CrossRefGoogle Scholar
Triscritti, F (2013) Mining, development and corporate-community conflicts in Peru. Community Development Journal 48, 437–450.CrossRefGoogle Scholar
Van Der Ploeg, F and Poelhekke, S (2017) The impact of natural resources: survey of recent quantitative evidence. The Journal of Development Studies 53, 205–216.CrossRefGoogle Scholar
Vega-Centeno, P (2011) Los efectos urbanos de la minería en el Perú: del modelo de Cerro de Pasco y La Oroya al de Cajamarca. Apuntes: Revista de Ciencias Sociales 38, 109–136 (in Spanish).CrossRefGoogle Scholar
Supplementary material: PDF

Orihuela and Gamarra-Echenique supplementary material

Orihuela and Gamarra-Echenique supplementary material

Download Orihuela and Gamarra-Echenique supplementary material(PDF)
PDF 382.5 KB