Golden opportunities: Mining, production linkages, and firm development

This study addresses a longstanding question in resource economics: whether largescale gold mining generates enclave-type production structures or promotes broader production linkages through changes in firm behavior and factor allocation. Using geocoded panel data on African manufacturing and service enterprises, we document that firms near active gold mines, relative to those near inactive mining sites, experience restructuring of local production systems, reflected in higher sales, employment, and labor productivity alongside reduced reliance on imported inputs. We identify labor upgrading and domestic supply-chain deepening as key mechanisms. Firms near active mines rely less on temporary and female workers while employing more skilled workers at higher wages, supplier-intensive industries show stronger responses alongside lower material input costs, and firms face fewer infrastructure and administrative constraints. These spillovers are stronger in better-governed countries, service sectors, and foreign-affiliated firms, highlighting the conditions under which resource extraction may support structural transformation rather than enclave-type growth.