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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: [email protected]
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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

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