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We study the role of resource rents in explaining the distinct urbanization and structural transformation patterns, observed in many developing countries in the last few decades. We present a simple model where the effect of resource rents on urbanization and structural transformation depends on income redistribution between rural and urban areas. Combining several spatially granular data sets by geography, including global property-level mining data, global high-resolution population data layer, and the population census microdata, we empirically test the question at the city level on a global scale and estimate the causal effect of mineral price shocks of nearby mines on city outcomes. We find that on a global average, mining booms result in an increase in the urban population, and the reallocation of labor from agriculture to low-skilled services. The effects are mainly driven by African cities, consistent with the phenomenon of “Urbanization without Industrialization” in these countries. We explore several potential mechanisms. The evidence suggests that low opportunity cost due to low agricultural productivity in African countries incentivizes rural farmers to migrate in response to income shock instantiated by mining booms.
Qing Huang is currently a postdoctoral research associate at Princeton University. She has a Ph.D. in economics from the National School of Development of Peking University, and a bachelor's degree in economics from Nankai University. She was a visiting Ph.D. student at Princeton University during 2019-2020. Her research is primarily in development economics, with a focus on industrialization and economic development in China. She studies the relationship between demographic transition, agricultural development, and industrialization, and the role of entrepreneurship in the process of economic development in China.