Socioeconomic Impact of Mining Activity: Effects of Gold Mining on Local Communities in Tanzania and Mali

Development Analytics Research Paper Series No. 1402

93 Pages Posted: 6 Dec 2014

See all articles by Beyza Polat

Beyza Polat

Ozyegin University; Development Analytics

Nazli Aktakke

Development Analytics

Meltem A. Aran

Development Analytics

Andrew Dabalen

World Bank - Africa

Punam Chuhan-Pole

World Bank

Aly Sanoh

World Bank - Africa

Date Written: November 1, 2014

Abstract

The effect of extractive activity on economic growth and development is a long debated issue in economics literature. While most of the existing literature focuses on the macroeconomic impacts of natural resource abundance, there is a rather limited but growing strand of literature that studies the local economy impact of extractive activity using micro data. This paper aims to contribute to this literature by providing new evidence on the effects of gold mining in two resource-rich African countries: Tanzania and Mali.

We utilize a rich data set collected from various sources and apply a differences-in-differences estimation strategy to see whether individuals/households geographically close to mines, are affected differently from the opening of mines. We look at a number of outcome variables including various measures of children’s health indicators, households’ access to facilities, and women and men’s employment status. The first part of the analysis is at the household/individual level where the data is kept and treatment is defined at. As a second attempt, we aggregate the data up to the district level by using the appropriate poverty mapping techniques and apply Abadie et al. (2010)’s Synthetic Control Group method to study whether mining districts behave differently from non-mining districts after mines start operation.

We reach different conclusions for the two case countries. In the case of Tanzania, we show that households in the immediate mining catchment area are negatively affected from extractive activity whereas this effect becomes positive when we consider households that are located in neighboring and further away catchment areas. In the case of Mali, any significant positive impact of mining activity is on those households who are located closer to the mines. Those households, who are still in the catchment area but further away from the mine, are either not affected or negatively affected from mining activity.

Keywords: Economic Development, Local Economy, Extractive Industries, Poverty, Poverty Mapping, Gold Mining, Africa, Tanzania, Mali, Differences-in-Differences, Synthetic Control Group.

JEL Classification: I31, I32, Q32

Suggested Citation

Polat, Beyza and Aktakke, Nazli and Aran, Meltem A. and Dabalen, Andrew and Chuhan-Pole, Punam and Sanoh, Aly, Socioeconomic Impact of Mining Activity: Effects of Gold Mining on Local Communities in Tanzania and Mali (November 1, 2014). Development Analytics Research Paper Series No. 1402. Available at SSRN: https://ssrn.com/abstract=2533961 or http://dx.doi.org/10.2139/ssrn.2533961

Beyza Polat (Contact Author)

Ozyegin University

Kusbakisi Cd. No: 2
Altunizade, Uskudar
Istanbul, 34662
Turkey

Development Analytics ( email )

31 Mektep Sokak
Emirgan Sariyer
Istanbul, Istanbul 34467
Turkey

Nazli Aktakke

Development Analytics ( email )

31 Mektep Sokak
Emirgan Sariyer
Istanbul, Istanbul 34467
Turkey

Meltem A. Aran

Development Analytics ( email )

31 Mektep Sokak
Emirgan
Istanbul, Istanbul 34467
Turkey
902122778641 (Phone)

HOME PAGE: http://www.developmentanalytics.org

Andrew Dabalen

World Bank - Africa ( email )

1818 H Street
Washington, DC 20433
United States

Punam Chuhan-Pole

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Aly Sanoh

World Bank - Africa ( email )

1818 H Street
Washington, DC 20433
United States

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