Good mine, bad mine: natural resource heterogeneity and Dutch disease in Indonesia
We analyse the local effect of exogenous shocks to the value of mineral deposits at the district level in Indonesia using a panel of manufacturing plants. To the best of our knowledge, we are the first to model and estimate the effect of heterogeneity in natural resource extraction methods. We find...
| Main Authors: | , |
|---|---|
| Format: | Working paper |
| Published: |
University of Oxford
2018
|
| _version_ | 1797101506720169984 |
|---|---|
| author | Pelz, P Poelhekke, S |
| author_facet | Pelz, P Poelhekke, S |
| author_sort | Pelz, P |
| collection | OXFORD |
| description | We analyse the local effect of exogenous shocks to the value of mineral deposits at the district level in Indonesia using a panel of manufacturing plants. To the best of our knowledge, we are the first to model and estimate the effect of heterogeneity in natural resource extraction methods. We find that in areas where mineral extraction is relatively capital-intensive, mining booms cause virtually no upward pressure on manufacturing earnings per worker, and both producers of traded and local goods benefit from mining booms in terms of employment. In contrast, labour-intensive mining booms drive up local manufacturing wages such that producers of traded goods reduce employment. This source of heterogeneity helps to explain the mixed evidence for 'Dutch disease' effects in the literature. In addition, we find no evidence revenue sharing between sub-national districts leads to any spillovers. |
| first_indexed | 2024-03-07T05:52:57Z |
| format | Working paper |
| id | oxford-uuid:e9846711-655f-403c-8112-9cc1cf3e1b2d |
| institution | University of Oxford |
| last_indexed | 2024-03-07T05:52:57Z |
| publishDate | 2018 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:e9846711-655f-403c-8112-9cc1cf3e1b2d2022-03-27T10:54:57ZGood mine, bad mine: natural resource heterogeneity and Dutch disease in IndonesiaWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:e9846711-655f-403c-8112-9cc1cf3e1b2dBulk import via SwordSymplectic ElementsUniversity of Oxford2018Pelz, PPoelhekke, SWe analyse the local effect of exogenous shocks to the value of mineral deposits at the district level in Indonesia using a panel of manufacturing plants. To the best of our knowledge, we are the first to model and estimate the effect of heterogeneity in natural resource extraction methods. We find that in areas where mineral extraction is relatively capital-intensive, mining booms cause virtually no upward pressure on manufacturing earnings per worker, and both producers of traded and local goods benefit from mining booms in terms of employment. In contrast, labour-intensive mining booms drive up local manufacturing wages such that producers of traded goods reduce employment. This source of heterogeneity helps to explain the mixed evidence for 'Dutch disease' effects in the literature. In addition, we find no evidence revenue sharing between sub-national districts leads to any spillovers. |
| spellingShingle | Pelz, P Poelhekke, S Good mine, bad mine: natural resource heterogeneity and Dutch disease in Indonesia |
| title | Good mine, bad mine: natural resource heterogeneity and Dutch disease in Indonesia |
| title_full | Good mine, bad mine: natural resource heterogeneity and Dutch disease in Indonesia |
| title_fullStr | Good mine, bad mine: natural resource heterogeneity and Dutch disease in Indonesia |
| title_full_unstemmed | Good mine, bad mine: natural resource heterogeneity and Dutch disease in Indonesia |
| title_short | Good mine, bad mine: natural resource heterogeneity and Dutch disease in Indonesia |
| title_sort | good mine bad mine natural resource heterogeneity and dutch disease in indonesia |
| work_keys_str_mv | AT pelzp goodminebadminenaturalresourceheterogeneityanddutchdiseaseinindonesia AT poelhekkes goodminebadminenaturalresourceheterogeneityanddutchdiseaseinindonesia |