Linkages and the Local Economic Impacts of Resource Booms

Speaker: Dr Juan Soto-Diaz

Affiliation: The University of Queensland

Location: Level 6 Boardroom (629), Colin Clark Building (#39), St Lucia Campus

Zoom: https://uqz.zoom.us/j/82603079317

Abstract: This study examines the role of production linkages in determining the contemporaneous and long-term general equilibrium effects of resource booms in local labor markets. Consistent with the predictions of a spatial equilibrium model that features a pre- and post-booming economy with production linkages, the evidence from Chile, a major emerging resource-oriented country, suggests that upstream linkages from the resource sector prevent productivity losses in the form of local Dutch disease (Allcott and Keniston, 2018). This mechanism operates by mitigating the crowding-out of local tradable firms and the subsequent loss of learning-by-doing associated with the resource boom and bust. However, this effect is attenuated by negative externalities from resource extraction and the propensity of firms to offshore intermediate inputs.