Mining Development and Opportunities for Poverty Reduction and Human Development in Latin America

Abstract

Large-scale mining development has a potential to contribute to human development and poverty reduction in Latin America, particularly in the area of influence of mining activities. Given efficient resources management with a core objective towards sustainable development, large-scale mines are sources of long-term impacts at local and national levels. This paper analyses the effects of large-scale mining development on poverty reduction in the Antofagasta Region, Chile. By employing a simple econometric model, this research demonstrates that large-scale mining development can be an important economic engine for poverty reduction and social progress. The regression results show high correlation between the independent and dependent variables and indicate that poverty levels have decreased with every increase in mining production over the period 1990-2010. Based on these results, it is possible to conclude that: 1) there is strong evidence of causality between mining activity (represented by copper production) and poverty reduction (percentage of poverty) in Antofagasta during that period and 2) Mining activity is the most important source of poverty reduction in Antofagasta. The paper recommends that efforts need to be coordinated among policy makers, interested groups, civil society and mining companies to develop complementary policies, strategies and actions focused on specific social aspects to transform mining opportunities into effective results.