The Impact of Kumtor Gold Mine on the Economic and Social Development of the Kyrgyz Republic

Abstract

The Kumtor gold mine is the Kyrgyz Republic’s largest enterprise. This paper provides details of the mine’s operations and documents its current socioeconomic contribution to the Kyrgyz economy including GDP, exports, investment, and the government budget and social development of the country. The paper also simulates the mine’s future operations and its impact on the economy of the country for three scenarios: core (business as usual), pessimistic (abrupt closure of the mine), and optimistic (extended terms of its service). This analysis is implemented using computable general equilibrium model (MAMS) developed by the World Bank and adapted by the authors to the Kyrgyz economy. Results of the simulations confirm the large direct and indirect impact of Kumtor on the country’s economy.

Keywords: Kumtor gold mine, CGE modeling, extractive industries, Kyrgyz Republic

JEL Classification: Q32, Q38