The Effects of Mining on Local Poverty in Developing Countries: Evidence from Mali

Abstract

ecent within-country studies of the ‘resource curse’ call into question whether mining booms benefit local populations living near mineral endowments in developing countries. In particular, mining booms have been associated with increased violence, localized inflation, increased poverty, and increased inequality. Relying on volatile gold prices that have caused mining booms in West African countries (Ghana, Burkina Faso, and Mali) since the mid-2000s, we test whether these booms have increased or decreased poverty and expenditure among populations that live near the mines. Based on detailed household panel data from Mali, our results generally show positive effects of gold price booms on households. Household expenditure increased, and poverty decreased during years of high gold prices for formal and artisanal mining areas, with artisanal mining having a stronger beneficial effect. The results suggest the booms have been more of an economic blessing than a curse in Mali