Abstract

The main objective of this paper is to measure the impact of the mining sector on the Chilean II region and evaluate the conditions that affect the magnitude of this impact. Using an Input Output matrix for the II region, we calculate the impact on output, income and employment. Later, we compare the impact on the labor market between private and state owned firms, showing that there is a significant difference in the management system of each firm that results in different costs and benefits for regional development. There also are important differences in impacts associated with fly-in fly-out workers from other regions that are partially measured by the multipliers. The analysis shows that the mining sector is not important in terms of the backward and forward linkages within the region, but is very important in terms of its volume of production. The main linkages of the mining sector are with the three sectors with the highest backward and forward linkages; when these linkages are considered along with mining's level of production, mining is by far the most important sector of the Chilean II region. Finally, we survey other impacts on the quality of life of the regional population, describing the actions that have been taken by private and state owned firms, as well as the role of the government in promoting development in the II region. © 2001 Elsevier Science Ltd. All rights reserved.