Mining Revenues and Inclusive Development in Guinea

By Alejandro Badel, Rachel Fredman Lyngaas

April 29, 2023

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Alejandro Badel, and Rachel Fredman Lyngaas. Mining Revenues and Inclusive Development in Guinea, (USA: International Monetary Fund, 2023) accessed September 19, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

What are the potential benefits of increasing the taxation of a foreign extractive sector? This paper applies this question to the case of Guinea by using a multi-sector macro-inequality model with heterogeneous agents. We quantify the long-run equilibrium impact of additional taxation when the proceeds are invested in human capital, inclusive infrastructure, and social transfers. Our analysis focuses on the response of GDP, labor formalization, poverty rates, Gini coefficients, rural/urban inequality and sectoral reallocation. The three forms of investment are complementary. Infrastructure investments favor formal production in the urban area while growth and government transfers boost the demand for food. These effects help support the rate of return to education, protecting job formalization through higher wages and prices of informal goods, as the education policy boosts labor supply in rural and urban areas.

Subject: Economic sectors, Education, Labor, National accounts

Keywords: Calibration, Consumption, Global, Growth, Heterogeneous agents, IMF working paper 23/90, Incomplete markets., Inequality, Infrastructure, Infrastructure investment, Laffer curve, Long-run equilibrium impact, Mining sector, Opportunity cost, Output

Publication Details

Pages:

51
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2023/090
Stock No:

WPIEA2023090
ISBN:

9798400240621
ISSN:

1018-5941

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