Mining matters: Natural resource extraction and local business constraints

Research on VOXEU from

Ralph de Haas (EBRD) and Steven Poelhekke (VU Amsterdam):

Mining matters: Natural resource extraction and local business constraints

Summary:
The extraordinary expansion in global mining activity over the last two decades, and its increasing concentration in emerging markets, has reignited the debate over the impact of mining on local economic activity. This column analyses how the presence of nearby mines influences firms in eight countries with large manufacturing and mining sectors. Mines are found to out-compete local manufacturing firms for inputs, labour, and infrastructure. However, mining activity is found to improve the business environment on a wider geographic scale.

New OxCarre research: Resource discoveries and FDI bonanzas

New OxCarre research from:

Gerhard Toews (OxCarre) and Pierre-Louis Vezina (King's College London)

Resource discoveries and FDI bonanzas

Abstract:

This paper examines the effect of giant oil and gas discoveries on foreign direct

investment in developing economies using a new project-level dataset. We document

a large increase in non-extraction FDI in the 2 years following a giant discovery, an

event which is unpredictable due to the uncertain nature of exploration. We find

that FDI inows increase by 73% and that this wave is driven by a 37% increase

in the number of FDI projects as well as a 22% increases in source countries and

a 17% increase in target sectors. We interpret this FDI response as evidence for the

news-driven business-cycle hypothesis within a developing country setting and highlight

FDI bonanzas as an important development channel for resource rich economies.

Mongolia: Living from loan to loan

Article in the FT:

Since the commodities boom turned to bust, the country has traded self-sufficiency for indebtedness.

Read on here.