Extractive Industries and Local Development in the Peruvian Highlands: Socio-Economic Impacts of the Mid-1990s Mining Boom

Abstract

Since the late Nineties, the mining sector in Peru has been experiencing a protracted period of rapid growth. This paper investigates local impacts of the mining boom on migration, on access to basic services, on labour market and on occupational distribution across sectors. By applying propensity score matching technique, mining and non-mining districts are compared. The results show that recent mining expansion has encouraged migration inflows to mining districts and affected the sectoral composition of the labor force in these areas. However, despite the great expectations and the new institutional and legislative settings, the mining growth has not produced a multiplicative effect on non-mining and non-agricultural activities and did not boost a process of economic diversification towards non-primary sector. Finally, the analysis shows a significant heterogeneity in impacts on labour opportunities and on access to basic services across rural and urban areas, and between districts with a long history of mining exploitation and new mining areas.