Unlocking the Wealth of Nations FDI to the Rescue? A Case Study of the Gold Mining Industry of Ghana
Abstract
That Ghana is rich in mineral resources particularly gold is evidenced in different forms the principal one being that the country was once called the
‘Gold Coast’ during the colonial era in obvious reference to the rich mineral deposits the early European explorers astonishingly discovered upon arrival at the shores of the country.
All over the world, the economies of nations revolve around some key sectors and industries and that national fortune or misfortune is to some extend
inextricably linked to the performance of ‘the goose that laid the golden egg’. There is therefore no gain saying that in drafting national policies, specific
attention is often paid to those industries sometimes at a great cost to the nation.
The conclusions drawn from the study are that:
In spite of the numerous incentives accorded investors under the mining laws of Ghana, the mining sector has not made any impressive gains to benefit national economy as one would have expected - due to a number of reasons one being the relatively low equity capital often not more than 10% share holding held by government. On the contrary, investors continue to reap and repatriate a
chunk of the benefits; courtesy of the liberalized and generous concessions conferred upon them by the mining policy document.
Again, according exclusive and unparallel attention to a sector that relies on a non renewable resource and more importantly that does not forge a significant link with the rest of the national economy leaves the future of the economy in gloom and could aptly be described as a ‘recipe for disaster’.
That incentive based competition for FDI leaves in its trail a ‘bidding war spiral’ as nations compete with each other using mainly generous concessions
to lure foreign investors to consider locating and relocating investments in their respective countries. In the process, public finance which is deemed crucial to national development and welfare are deeply eroded mainly through fiscal and physical concessions granted.
The study concludes by advocating global or regional collaboration and support among investors and governments alike with a view to drawing a common
standard to serve as a platform upon which the FDI bargaining process would revolve. It specifically recommends a rule based strategy to ensure that the
gains accruing from FDI are fairly shared between the host government and the foreign investor- a sort of ‘win - win situation’ and not a ‘winner takes the
majority’ as it appears that incentive based competition strategy for FDI revolves around.
Degree
Student essay
University
Göteborg University. School of Business, Economics and Law
Collections
View/ Open
Date
2004Author
Jojo Amos, Gideon
Keywords
Foreign Direct Investment (FDI)
Host Government Policies
Host Government Objectives
Competition among Government for FDI
Business Objectives
Economic Impacts.
ISSN
1403-85117
Series/Report no.
Masters Thesis, nr 2003:62
Language
en