Mining Matters: Natural Resource Extraction

May 2016 | 175

Authors: Ralph De Haas, Steven Peolhekke

We estimate the impact of local mining activity on the business constraints experienced by 22,150 firms across eight resource-rich countries. We find that the presence of active mines deteriorates the business environment in the immediate vicinity (<20 km) of a firm but relaxes business constraints of more distant firms. The negative local impact of mining is concentrated among firms in tradable sectors whose access to inputs and infrastructure becomes more constrained. This deterioration of the local business environment adversely affects firm growth and is in line with a natural resource curse at the sub-national level.

JEL Codes: L16; L25; L72; O12; O13; Q30

Keywords: Mining; natural resources; business environment

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