Do Resource Rents Drive Urbanization and Structural Transformation? A Global Analysis
Qing Huang, Victoria Wenxin Xie and Wei You
Abstract
This paper provides the first causal estimate of the impact of mineral price changes on population and industrial structure in a global sample of cities. We find that increases in the prices of minerals extracted from nearby mines lead to employment reallocation away from agriculture and primarily toward low-skilled services, without crowding out manufacturing activities. While the city population grows, there is limited evidence for mining booms driving large-scale urbanization. Cities in Sub-Saharan Africa exhibit exceptionally strong responses to mining booms. These results suggest that resource-led structural transformation could present a new development path for resource-rich developing countries.