The gold digger and the machine. Evidence on the distributive effect of the artisanal and industrial gold rushes in Burkina Faso
Abstract
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. 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 for households neighboring industrial mines. Thus, while the privatization and industrialization
of production increases efficiency, in accordance with much of the literature on the commons,
the distributive consequences of each mode of property management are such that artisanal mines
benefit more to the local communities.
Domains
Economics and FinanceOrigin | Files produced by the author(s) |
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