A mining success story

To add to the recent slew of thoughts on the resource curse, here is a micro-level success story which has been verified with academic rigor:

This paper studies the impact of Yanacocha, a large gold mine in Peru, on the local population. Using annual household data from 1997 to 2006, we find robust evidence of a positive effect of the mine's demand of local inputs on real income. The effect, an average income increase of 1.7% per 10% additional mine's purchases, is only present in the mine's supply market and surrounding areas. We also find evidence of improvements on measures of welfare and reduction of poverty. We examine and rule out that our results are driven by increased public expenditure associated to the mining revenue windfall. Using a spatial general equilibrium model, we interpret these results as evidence of net welfare gains generated by the mine's backward linkages and its multiplier effect.

It is good to inform the macro-level resource curse debate with positive anecdotes like this one, to balance the many negative ones.

Via Roving Bandit, who also celebrates his one-year blogiversary. With so many good bloggers only one year (or two years) old, I find the robustness and vibrancy of the blogosphere simply astounding. Can you imagine what it will be like after another year, or five, or ten?