Mining-based growth and productive transformation in the Democratic Republic of Congo: What can an African lion learn from an Asian tiger?

Abstract

The impressive recent GDP growth performance in DRC has not contributed to significantly reduce the high levels of initial poverty that were inherited from long years of war and mismanagement. Using a CGE-microsimulation model of the DRC, this study assesses the economywide growth and distributional effects of mining-based growth. Unlike other studies, this paper went a step further by comparing the results of mining-led growth to an alternative more broad-based development strategy where DRC develops shared capabilities required to engineer growth in the manufacturing sector. The findings suggest that mining will remain the key driver of DRC exports but not possibly the source of economic growth. The most plausible reason is the existence of the Dutch disease and the structural change that it generates. These structural effects will remain permanent even in the long-run unless the government implements a deliberative industrial policy. Interestingly, the results highlight the possible role of artisanal mining and demand for domestic agricultural and food products in improving the welfare of poor rural households. Finally, the findings show that policies to develop shared capabilities required to engineer growth in the manufacturing sector generate a productive transformation that produces pro-poor effects.