Empirical analysis on contribution share of safety investment to economic growth: A case study of Chinese mining industry

Insufficient investment in safety is one of the most important reasons which lead to frequent accidents in Chinese mining industry. Safety input has long been regarded as a ‘sunk cost’, lacking output, and little attention from mining companies was focused on increasing safety input according to technical codes or technical requirements due to the narrow understanding on safety input. So, the empirical analysis on the contribution share of safety investment to economic growth is very important. In this paper, a new set of production safety indexes including six 1-level indexes for describing the safety level of mining production in China was constructed on the basis of Granger causality test. Meanwhile, a mining economic growth model was constructed on the basis of the new production safety indexes with co-integration theory and dynamic modeling system. The empirical results show that the production safety factor in the short term indeed drives the GDP growth in the mining industry although labor and capital input remain the major factors impacting mining economic growth, and its long term contribution share is 7.7%. Principal Component Analysis (PCA) of production safety indexes, shows that the safety level of mining production increased more than 21-fold during 1991–2009, and the investment in mining technology development capability, mining safety production environment and mechanized level of mining should be the direction to focus for improving the safety level of mining production.