Mining and economic development
Did China’s WTO accession affect African local economic development?
This paper investigates China’s influence on local economic development in 37 African countries between 1997 and 2007. We compare the average changes in economic growth, migration, spatial inequality, and welfare of mineral-rich districts, both prior and after China’s WTO Accession, to the corresponding changes in districts without any mineral endowment. Using this exogenous variation, we show that during 2002–07, mining activities in response to the global commodity price-boom increased welfare as measured by spatial Sen Index but were insignificant for local economic growth, migration, and spatial inequality.
Our findings suggest that policy needs to do more to improve the local benefits of positive external shocks (such as China’s WTO Accession): it is not enough to assume, given Africa’s high spatial inequality, that local economies will automatically benefit from higher national growth