The gold digger and the machine. Evidence on the distributive effect of the artisanal and industrial gold rushes in Burkina Faso
We use a quasi-natural experiment, the recent gold boom in Burkina Faso, to document the local wealth impact of private versus common property management. The net impact of privatizing the management of a natural resource on wealth is subject to theoretical debate. We measure household wealth through consumption and consider two modes of property management: artisanal and industrial mines. Artisanal mines are labor intensive and managed as a common property. Industrial mines are capital intensive and privatize the resource by enclosing their production area. We identify the impact of each mode of gold extraction by exploiting two sources of variation: changes in the gold price and the geological setting of Burkina Faso. Changes in the gold price affect directly the earnings of artisanal mines, and triggered the opening of several industrial mines from 2007 onwards. We show that a 1% increase in the gold price increases consumption by 0.2% for households neighboring artisanal mines, while we do not find any effect of opening an industrial mine for households neighboring these mines. Thus, while the privatization and industrialization of production increases efficiency, in accordance with much of the literature on the commons, the local distributive consequences of each mode of property management may be such that artisanal mines benefit more to the local communities.
Date: 24 January 2018, 12:00
Venue: Seminar Room D
Speaker: Victoire Girard (Université d'Orléans)
Organising department: Department of Economics
Part of: OxCarre Lunchtime Seminar
Booking required?: Not required
Audience: Members of the University only
Editors: Antonella Surdi, Erin Saunders, Anne Pouliquen