The regional economics of mineral resource wealth in Africa

Abstract

AbstractWe study the regional economics of mineral resource activity in Africa. Using geocoded data on mine openings and closures in Africa, we document that mining regions experience local economic booms while a mine is in operation. We then explore how mineral resources affect non‐mining regions. Non‐mining regions might be affected by mining activity due to deliberate government policies (e.g. regional redistribution) or due to various inadvertent country‐level macroeconomic adjustments (e.g. Dutch‐Disease‐type effects or declining institutional quality). Our results suggest that mineral resources have heterogeneous effects on non‐mining regions. Politically important regions benefit economically, while generic non‐mining regions are, in general, worse off. Exploring mechanisms, we find that these spatial patterns arguably emerge due to both deliberate government policies as well as Dutch‐Disease‐style macroeconomic adjustments that harm regions specializing in sectors other than mining.