Mining and Local Communities: Evidence from Batken Oblast, Kyrgyzstan

Abstract

For a long time, natural resources have been the subject of long disputes among the researchers as to whether they exert positive or negative influence on the country’s economic development. This paper expands the existing literature strand by examining the local economic impact of two largest mining plants located in Batken oblast, Southern Kyrgyzstan. Using annual Kyrgyz Integrated Household Surveys spanning over the period from 2006 to 2008 and the measure of distance from the mining sites, the main finding suggests that the plants’ demand of local inputs positively affects the income per capita and education of the local population. It is also found that the positive effects are existent in the cities of the plants’ location, as well as in the surrounding areas, but they tend to dissipate in the areas located remotely from the mining sites. Generally, the obtained results highlight an importance of the market channels through which natural resources may fully harness their potential of backward linkages.