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American Economic Journal: Economic Policy: Vol. 5 No. 2 (May 2013)

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Natural Resources and Local Communities: Evidence from a Peruvian Gold Mine

Article Citation

Aragón, Fernando M., and Juan Pablo Rud. 2013. "Natural Resources and Local Communities: Evidence from a Peruvian Gold Mine." American Economic Journal: Economic Policy, 5(2): 1-25.

DOI: 10.1257/pol.5.2.1

Abstract

This paper examines the local economic impact of Yanacocha, a large gold mine in Northern Peru. Using annual household data from 1997 to 2006, we find evidence of a positive effect of the mine’s demand for local inputs on real income. The effects are only present in the supply market and surrounding areas, and reach unskilled workers in non-mining sectors. Consistent with a general equilibrium framework, we also find an increase in the local price of nontradable goods. Taken together, our results underline the potential of backward linkages from extractive industries to create positive spillovers in less developed economies. (JEL L72, O13, O18, Q32, Q33, R11)

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Authors

Aragón, Fernando M. (Simon Fraser U)
Rud, Juan Pablo (Royal Holloway, U London)

JEL Classifications

L72: Mining, Extraction, and Refining: Other Nonrenewable Resources
O13: Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
O18: Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
Q32: Exhaustible Resources and Economic Development
Q33: Resource Booms
R11: Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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