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Intensive and extensive margins of mining and development: Evidence from Sub-Saharan Africa
Authors: Nemera Mamo, Sambit Bhattacharyya, and Alexander Moradi
Source: Journal of Development Economics, 139: 28-49; DOI: 10.1016/j.jdeveco.2019.02.001
Topic(s): Wealth Index
Country: Africa
  Multiple African Countries
Published: JUN 2019
Abstract: What are the economic consequences of mining in Sub-Saharan Africa? Using a panel of 3,635 districts from 42 Sub-Saharan African countries for the period 1992 to 2012 we investigate the effects of mining on living standards (measured by night-lights and household/cohort characteristics from Demographic and Health Surveys) and public service provisions (from Afrobarometer). Night-lights increase in mining districts when mineral production expands (intensive margin), but large effects are mainly associated with new discoveries and new production (extensive margin). We identify the effect by carefully choosing feasible but not yet mined districts as a control group. In addition, we exploit first, single-first, giant and major discoveries as exogenous news shocks. Mines in Africa exhibit enclave characteristics as we find little evidence of significant spillovers to other districts.