Extractive industries and regional development: Lessons from Peru on the limitations of revenue devolution to producing regions. (original) (raw)

2019, Regional&Federal Studies

The transfer of oil and mining revenues to the subnational governments of resource-rich jurisdictions is a common policy aimed at promoting development and reducing local opposition to extraction. In the early 2000s, Peru implemented a radical version of that policy. Peruvian mining regions received fiscal transfers many times greater than the national average during the last commodity boom. The strategy had mixed effects on well-being indicators. These transfers had statistically significant positive effects on economic growth and the rate of school attendance at different ages. In contrast, they did not have a significant impact on poverty reduction or the coverage of other basic services, while being positively correlated with an increase in the income gap between women and men. Overall, the results are not as positive as the promoters had expected. The transfers generated political incentives for local authorities to pursue short-term, clientelistic spending that has reduced their potential benefits.

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Extractive industries and local development in the Peruvian Highlands

Environment and Development Economics, 2014

During the last 20 years, the mining sector in Peru has been experiencing sustained growth. Using census, administrative, nationally and regionally representative data we compare districts in the Peruvian Highlands with a recent mining development with suitable counterfactuals. We find that the new mining activities attract migration inflows, and have some positive effects over educational indicators, and that these impacts, on average, are smaller in districts with lower levels of corporate social expenditure. However, the results of this study suggest that the local potential welfare impact of the mining boom is largely untapped and corporate social responsibility has had a limited role in improving this effect.

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Aggravating the resource curse: Decentralisation, mining and conflict in Peru

The Journal of Development Studies, 2011

In the early part of this decade, at the beginning of the recent international commodity price boom, Peru adopted major components of the new ‘localist’ policy paradigm for the management of natural resource revenues. In particular, a large fraction of these revenues were transferred to the local governments in the mining areas. The results have been disappointing. Statistical and fieldwork evidence shows that these transfers have directly exacerbated local political conflicts. The new ‘localist’ policy paradigm is unlikely to be effective when, as in contemporary Peru, national political institutions are not supportive.

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The Political Effects of Resource Booms: Political Outcomes, Clientelism and Public Goods Provision in Peru

This study uses variation in natural resource rents and mineral production among Peruvian municipalities to analyze the impact of resource booms on local politicians’ behavior and citizens’ well-being. Although this topic has recently attracted several scholars, the existing empirical evidence remains inconclusive regarding whether resource booms are beneficial or detrimental to citizens via their effects on public good provision and welfare outcomes. I argue that, despite the fact that many of the existing theoretical models allow for the possibility of non-monotonic responses, the empirical literature has mostly approached this phenomena using linear models, failing to correctly understand the nature of resource booms. Exploiting the recent extraordinary increase in mineral prices along with a set of rules for the distribution of natural resource rents in Peru, I show that the effects of resource booms in reelection outcomes, political competition, and public goods provision are conditional to the size of the rents in a non-monotonic fashion. These results are robust to endogenous production responses and are consistent with a simple model of electoral competition in a resource rich economy.

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