Abstract
This paper investigates the local effects of mining on the quality of public services and on people’s optimism about their future living conditions in Africa. Most importantly, it assesses the moderating role of local institutions and local governments’ taxing rights in shaping the proximity-to-mine effects. The empirical framework connects more than 130,000 respondents from the Afrobarometer survey data (2005–2015) to their closest mines based on the geolocation coordinates of the enumeration areas (EA) and data on the mines and their respective status from the SNL Metals & Mining by the S&P. The geo-referenced data are matched with new indicators on local governments’ taxing rights across the African continent. Using a difference-in-differences strategy, the results indicate that citizens living near an active mine are less likely to approve government performance in key public goods and services – including health, job creation and improving living standards of the poor. On the moderating role of local governance and local taxing rights, the findings point to a negative impact of local corruption, yet a positive impact of local authorities’ discretion over tax and revenues. However, the positive impact of local taxing powers tends to reduce in environments with poor quality of local governance, high incidence of bribe payment and low level of trust in local government officials. Residents of mining communities with low corruption and comparatively high-level of raising revenue ability have the highest rate of positive appraisal compared to the other scenarios.
Highlights
The question of whether natural resources hinder or boost development has been extensively investigated in the literature, but it is only recently that the focus has shifted to disaggregated and subnational-level analyses (Cust and Poelhekke, 2015)
As per our third contribution to the literature, we introduce a measure of decentralization based on the legal assignment of tax-related decisions to local governments issued from a new dataset on tax and revenue assignment in developing and emerging economies
Compared to individuals in communities located near an inactive mine, those living near an active mine are 2.3% less likely to report a positive appraisal of the government performance
Summary
The question of whether natural resources hinder or boost development has been extensively investigated in the literature, but it is only recently that the focus has shifted to disaggregated and subnational-level analyses (Cust and Poelhekke, 2015). In Africa more recent contributions have shed light on the local effects of mining on economic activity and public service delivery (Mamo et al, 2019), on socio-economic indicators (Kotsadam and Tolonen, 2016; Benshaul-Tolonen, 2019) and local conflict and corruption (Lujala, 2010; Maystadt et al, 2013; Berman et al, 2017). Notwithstanding, the results suggest that the marginal effects of mining on the performance assessment of governments are positive in countries that have a higher level of decentralization This positive effect tends to be reduced in environments with poor quality of local governance, high incidence of bribe payments, and highlevel of distrust in local public officials.
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