Mining and Local Corruption in Africa
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Knutsen, C.H., A. Kotsadam, E.H. Olsen, T. Wig
We investigate whether mining affects local corruption in Africa. Several cross-country analyses report that natural resources have adverse effects on political institutions by increasing corruption, whereas other country-level studies show no evidence of such “political resource curses.” These studies face well-known endogeneity and other methodological issues, and employing micro-level data would allow for drawing stronger inferences. Hence, we connect 92,762 Afrobarometer survey respondents to spatial data on 496 industrial mines. Using a difference-in-differences strategy, we find that mining increases bribe payments, and this result is robust to using alternative models. Mines are initially located in less corrupt areas, but mining areas turn more corrupt after mines open. When exploring mechanisms, we find that local economic activity relates differently to corruption in mining and non-mining areas, suggesting that mining income incentivizes and enables local officials already present to require more bribes.