The Effect of Mining Exploration on the Living Standards of the Indigenous Peoples, A Case Study of Iran

One of the challenges raised by the mining sector at the regional level, is the lack of benefits for the local communities from the advantage of the externalities generated by the presence of mining producers. The purpose of this study is to empirically investigate this challenge. This is achieved by estimating the relationship between the provinces' living standards and the share of the province's mineral production, using the Arellano-Bover/Blundel- Bond two-step Dynamic GMM Panel Data approach. Also, the share of the added value of each province is included in the model as a control variable of the level of development of the provinces. The estimation was obtained using provincial data for the period of 2014-2020. The empirical results of this study show that the increase in exploration activities does not increase the living standards of the local communities. Finally, mechanisms such as corporate social responsibility, implementation of investment funds, and shareholding of mines by local community can help to solve this challenge.