Social Conflict in Rural Regions and Firm Ownership: Evidence from the Mining Sector in Latin America
DOI:
https://doi.org/10.47872/laer-2020-29-2sKeywords:
Ownership, Investment, Social Conflict, Latin America, Mining, CausalityAbstract
Using firm-level data for five countries in Latin America we find a negative and statistically significant link between social conflict in rural areas and ownership of mines. This result suggests that the social conflict around mining projects can affect strategic firm behavior intended to diversify risk in the face of social, political and financial pressures. It constitutes evidence that the costs of social conflict can be considered a serious challenge for firms and diverges from the literature which has generally viewed these costs as relatively unimportant to investment decisions. We apply broad sensitivity tests and find that this is robust. Our results also hold to a formal test of changes in specification.
References
Ali, S. H. (2006). Gold mining and the golden rule: a challenge for producers and consumers in developing countries. Journal of Cleaner Production, 14(3-4), 455-462. https://doi.
org/10.1016/j.jclepro.2004.05.009
Arce, M., Polizzi, M. S., & Reeder, B. W. (2020). Willingness to protest over resource extraction in Latin America. The Extractive Industries and Society, 7(2), 716-728. https://doi.org/10.1016/j.exis.2020.03.005
Arellano-Yanguas, J. (2011). Aggravating the Resource Curse: Decentralisation, Mining and Conflict in Peru. Journal of Development Studies, 47(4), 617-638. https://doi.org/10.1080/00220381003706478
Bebbington, A., & Bury, J. (2014). Political Ecologies of the Subsoil. In: Bebbington, A., & Bury, J. (Eds). Subterranean Struggles: New Dynamics of Mining, Oil, and Gas in Latin America, 1-25. Austin: University of Texas Press.
Bebbington, A., Humphreys Bebbington, D., Bury, J., Lingan, J., Muñoz, J. P., & Scurrah, M. (2008). Mining and Social Movements: Struggles Over Livelihood and Rural Territorial Development in the Andes. World Development, 36(12), 2888-2905. https://doi.org/10.1016/j.worlddev.2007.11.016
Bellows, J., & Miguel, E. (2009). War and local collective action in Sierra Leone. Journal of Public Economics, 93(11-12), 1144-1157. https://doi.org/10.1016/j.jpubeco.2009.07.012
Bice, S., Brueckner, M., & Pforr, C. (2017). Putting social license to operate on the map: A social, actuarial and political risk and licensing model (SAP Model). Resources Policy, 53, 46-55. https://doi.org/10.1016/j.resourpol.2017.05.011
Bridge, G. (2004). Mapping the Bonanza: Geographies of Mining Investment in an Era of Neoliberal Reform. The Professional Geographer, 56(3), 406-421. https://www.scribd.com/document/0842991/44-Mapping-the-Bonanza-Geographies-of-Mining-Neoliberal-Reform-Bridge
Canel, E., Idemudia, U., & North, L. L. (2010). Rethinking Extractive Industry: Regulation, Dispossession, and Emerging Claims. Canadian Journal of Development Studies / Revue Canadienne d’études du développement, 30(1-2), 5-25. https://doi.org/10.1080/02255189.2010.9669279
Collier, P., & Hoeffler, A. (2000). Greed and Grievance in Civil War. The World Bank. Conde, M., & Le Billon, P. (2017). Why do some communities resist mining projects while others do not? The Extractive Industries and Society, 4(3), 681-697. https://doi.org/10.1016/j.exis.2017.04.009
Dougherty, M. L. (2011). The Global Gold Mining Industry, Junior Firms, and Civil Society Resistance in Guatemala. Bulletin of Latin American Research, 30(4), 403-418. https://doi.org/10.1111/j.1470-9856.2011.00529.x
Earl, J., Martin, A., McCarthy, J. D., & Soule, S. A. (2004). The Use of Newspaper Data in the Study of Collective Action. Annual Review of Sociology, 30(1), 65-80. https://doi.org/10.1146/annurev.soc.30.012703.110603
Easterly, W., & Levine, R. (1997). Africa’s Growth Tragedy: Policies and Ethnic Divisions. The Quarterly Journal of Economics, 112(4), 1203-1250. https://doi.org/10.1162/003355300555466
Eden, L., & Miller, S. R. (2004). Distance Matters: Liability of Foreignness, Institutional Distance
and Ownership Strategy. In: Hitt, M. A., & Cheng, J. L. C. (Eds.) Theories of the Multinational Enterprise: Diversity, Complexity and Relevance (Advances in International Management, Vol. 16), Emerald Group Publishing Limited, Bingley, 187-221. https://doi.org/10.1016/S0747-7929(04)16010-1
Franks, D. M., Davis, R., Bebbington, A. J., Ali, S. H., Kemp, D., & Scurrah, M. (2014). Conflict translates environmental and social risk into business costs. Proceedings of the National Academy
of Sciences, 111(21), 7576-7581. https://doi.org/10.1073/pnas.1405135111
Haslam, P. A., & Ary Tanimoune, N. (2016). The Determinants of Social Conflict in the Latin American Mining Sector: New Evidence with Quantitative Data. World Development, 78, 401-419. https://doi.org/10.1016/j.worlddev.2015.10.020
Haslam, P. A., Ary Tanimoune, N., & Razeq, Z. M. (2019). Is “being foreign†a liability for mining companies? Locational liabilities and social conflict in Latin America. Resources Policy, 63, 101425. https://doi.org/10.1016/j.resourpol.2019.101425
Haslam, P., & Heidrich, P. (2016). From Neoliberalism to Resource Nationalism: States, Firms and Development. In: Haslam, P. A., & Heidrich, P. (Eds.) The Political Economy of Natural Resources and Development: From neoliberalism to resource nationalism. Routledge, Milton Park, 1-32. https://doi.org/10.4324/9781315687698
Henisz, W. J., Dorobantu, S., & Nartey, L. J. (2013). Spinning gold: The financial returns to stakeholder engagement. Strategic Management Journal, 35(12), 1727-1748. https://doi.org/10.1002/smj.2180
Humphreys, D. (2000). A business perspective on community relations in mining. Resources Policy, 26(3), 127-131. https://doi.org/10.1016/s0301-4207(00)00024-6
Jennings, C., & Sanchez-Pages, S. (2017). Social capital, conflict and welfare. Journal of Development Economics, 124, 157-167. https://doi.org/10.1016/j.jdeveco.2016.09.005
Kemp, D., & Owen, J. R. (2013). Community relations and mining: Core to business but not “core businessâ€. Resources Policy, 38(4), 523-531. https://doi.org/10.1016/j.resourpol.2013.08.003
Klapper, L., Richmond, C., & Trang, T. (2012). Civil Conflict and Firm Performance. The World Bank, Policy Research Working Paper, Washington, DC.
Menon, N., & Sanyal, P. (2007). Labor Conflict and Foreign Investments: An Analysis of FDI in India. Review of Development Economics, 11(4), 629-644. https://doi.org/10.1111/j.1467-9361.2007.00423.x
Mercer-Mapstone, L., Rifkin, W., Louis, W., & Moffat, K. (2017). Meaningful dialogue outcomes contribute to laying a foundation for social licence to operate. Resources Policy, 53, 347-355. https://doi.org/10.1016/j.resourpol.2017.07.004
Nachum, L. (2009). When Is Foreignness an Asset or a Liability? Explaining the Performance Differential Between Foreign and Local Firms. Journal of Management, 36(3), 714-739. https://doi.org/10.1177/0149206309338522
Orihuela, J. C. (2017). Institutions and place: bringing context back into the study of the resource curse. Journal of Institutional Economics, 14(1), 157-180. https://doi.org/10.1017/s1744137417000236
Owen, J. R. (2016). Social license and the fear of Mineras Interruptus. Geoforum, 77, 102-105. https://doi.org/10.1016/j.geoforum.2016.10.014
Ponce, A. F., & McClintock, C. (2014). The Explosive Combination of Inefficient Local Bureaucracies and Mining Production: Evidence from Localized Societal Protests in Peru. Latin American Politics and Society, 56(03), 118-140. https://doi.org/10.1111/j.1548-2456.2014.00243.x
Prno, J. (2013). An analysis of factors leading to the establishment of a social licence to operate in the mining industry. Resources Policy, 38(4), 577-590. https://doi.org/10.1016/j.resourpol.2013.09.010
Sala-i-Martin, X. X. (1997). I Just Ran Two Million Regressions. The American Economic Review 87(2), 178–183. Papers and Proceedings of the Hundred and Fourth Annual Meeting of the American Economic Association (May 1997). https://www.jstor.org/stable/2950909
Steinberg, J. (2019). Mines, Communities, and States: The Local Politics of Natural Resource Extraction inAfrica. Cambridge: Cambridge University Press. https://doi.org/10.1017/9781108638173
Svampa, M., Sola Alvarez, M., & Bottaro, L. (2010). Los movimientos contra la minerÃa metalÃfera a cielo abierto: escenarios y conflictos. In: Svampa, M., & Antonelli, M. (Eds.) MinerÃa transnacional, narrativas del desarrollo y resistencias sociales, 123-180. Buenos Aires: Biblos.
Urkidi, L., & Walter, M. (2011). Dimensions of environmental justice in anti-gold mining movements in Latin America. Geoforum, 42(6), 683-695. https://doi.org/10.1016/j.geoforum.2011.06.003
Verbrugge, B. (2015). Decentralization, Institutional Ambiguity, and Mineral Resource Conflict in Mindanao, Philippines. World Development, 67, 449-460. https://doi.org/10.1016/j.worlddev.2014.11.007
World Bank (2020). World Development Indicators. https://datacatalog.worldbank.org/dataset/world-development-indicators
Zaheer, S. (1995). Overcoming the Liability of Foreignness. Academy of Management Journal, 38(2), 341-363. https://doi.org/10.5465/256683
Downloads
Published
Versions
- 2021-07-10 (2)
- 2020-12-23 (1)
Issue
Section
License
Copyright (c) 2020 Alberto Chong, Paul Alexander Haslam
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
LAER Copyright and License
Authors submitting articles to Latin American Economic Review (LAER), automatically grant this journal a license to publish. Copyright of all published material remains with the authors, who can reuse it in future work without needing to make reference to LAER. Similarly, any other contribution of material to the website (for example text, photographs, graphics, video or audio) automatically grants us a right to publish. Copyright, however, remains with the author(s).
Authors release their work under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND 4.0). This license allows anyone to copy, distribute and transmit the work, provided the use has no derivatives, is non-commercial and appropriate credit to the author(s) is given. (If you remix, transform, or build upon the material, you may not distribute the modified material.)
A human-readable summary of the licence:
https://creativecommons.org/licenses/by-nc-nd/4.0/
Full legal text: