Mining and Structural Change: How Does Mining Affect Participation in the Global Value Chain?

Abstract

We examine the relationship between mining activity and participation and positioning in the global value chain in 74 developing countries from 1995–2018. Mining activity can impact countries' participation and especially their positioning in this chain through the changes it induces in the industrial and institutional structure of countries. We use the event study method, taking the activation of mines as the event to be studied, with a study time horizon of 5 years. Our relatively robust results show that mining activity harms positioning in the global value chain through specialisation towards start-of-the-chain industries. The type of mineral extracted, and the mode of extraction plays an essential role in this relationship. Institutional quality, level of openness, and geographical position of countries condition our results.