An Empirical Analysis of the Role of Mining Sector in the Development of Yazd Regional Economy

Mining activities have flourished globally since the beginning of the 21st century. Therefore, it has a major share in the economies of many countries, especially underdeveloped countries and their regions. The mining sector has its effects on the entire economy of a country or region in terms of employment, value added, foreign investment, taxes and the production of new materials for use in the production of products. Contrary to popular belief, mineral-rich economies have advantages over less prosperous countries, but for a variety of reasons, the abundance of resources does not necessarily lead to economic prosperity. Therefore, the purpose of this study is to investigate and analyze empirically between the mining sector of Yazd province with the industry, agriculture and services of this province using the time series technique and by examination whether there is evidence of positive or negative overflow from the mine to other sectors, to be able to help the previous literature as well. This study uses the vector autoregression model and Granger causality to experimentally investigate the relationship between the mining sector and other economic sectors in Yazd province.

Although Yazd province has economic benefits as a result of existing mining activities, this does not mean a significant reduction in poverty or sustainable growth. This suggests that people living in the communities around the mines may not benefit from the mining activities. For this reason, in these regions, there is a concern that the extracted natural resources will be a wasteful asset and will create a degraded and damaged environment after the completion of the extraction projects. Thus, since the 1980s, numerous studies have challenged the view that natural resources are a blessing to less developed countries. The resource curse hypothesis suggests that economic growth in many mineral and natural resource countries is low or negative over long periods of time.

The method used in the research is analytical-descriptive. In the other hand, in order to apply the theory proposed in the theoretical foundations of the research with the existing reality of Yazd province, as a case study, causal relationships between variables were examined by Granger causality test and also using econometric methods.

The findings of this study according to the Granger causality test show that there is a dynamic interaction between the mining, industry and agriculture sectors in the economy of Yazd province. Thus, the findings of the Granger causality test show that changes in the mining sector cause or introduce changes in both industry and agriculture. From these findings, it can be concluded that the mining sector of Yazd province in recent years has been able to cause changes in the growth rate of industry and agriculture in this province. Findings of the impulse response function show that the agricultural, service and industrial sectors in Yazd province react positively to shocks from the mining sector in changes in growth rates but in the long run and according to the findings of the impulse response function, these effects lose their effect over time.  

According to the findings of this research in the long run, due to what the curse of resources has been expressed, the mining sector in Yazd province can not be the cause for the economic development of this province. For economic development in Yazd province, it is necessary that all economic sectors in the province, especially the economic sector of mining as a subject of research can cause positive shocks in other sectors in the long run, but what the findings of this study indicate in the long run for the mining sector of Yazd province, the opposite has been shown. In the other hand, according to the experimental results of the present study, the findings of analysis of variance showed that the studied sectors in the economy of Yazd province in the long run explain a significant share of each sector and are involved in each other's growth rate, so it can be said that in regional development, development cannot be achieved by relying on one sector. In addition, it is necessary to create a mechanism that allows the exploitation and addition of value to mineral resources, because this sector can be used as an incentive for economic growth and development.