Mining and Mistrust in Government

Talk by Astghik Mavisakalyan (BCEC) as part of the Research Seminar Series of the IOS Economics Department.

Recent research shows that natural resources can hurt institutions by promoting corruption and diverting resources from the production of public goods. This, in turn, may have implications for the trust individuals have in their governments. We investigate this possibility by linking geo-referenced survey data for over 28,000 individuals with spatial data on mine locations in 28 post-communist countries of Central and Eastern Europe and the former Soviet Union. By exploiting the information on the development status of each mine site, we compare individuals living in the vicinity of producing versus not-yet-producing mines, relying on a cross-sectional difference in-differences approach. We find a negative relationship between mining production and trust in government, a result robust to a battery of tests. Our analysis of the mechanisms reveals that corruption perceptions and practices are likely the channels underlying this relationship. Additionally, we investigate potential non-institutional mechanisms as alternative channels but do not find evidence that they are at work.