Paper abstract:

The effects of foreign investment in natural resources on worker welfare and host country politics are a subject of ongoing debate. This paper examines this issue by analyzing the impact of Kyrgyzstan's dominant foreign-invested gold mine, which in 2020 accounted for 12.5% of Kyrgyzstan's GDP. One of the key findings is that mines with foreign ownership tend to isolate the benefited mining community from local residents. Using data from Kyrgyzstan household panel surveys from 2010 to 2016, the study shows that Kumtor, the country's largest foreign mine, offers better social benefits only to mine-related workers. The study also finds that the mining industry's wealth is associated with economic grievances among the non-mining sector and social division. The study also suggests that Kumtor's higher corporate earnings lead to higher levels of inequality and less trust in local leaders by mine workers.