Ghana: Gold Mining Resurgence: Difference between revisions

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Some developing countries have experienced the so-called “Dutch Disease” which is “a name applied to the phenomenon experienced by countries which have a rich endowment of minerals, the result of which is that the economy of the country becomes heavily reliant upon the revenues received from mineral sales, at the expense of the growth of other industries.” From the point of view of businesses, including mining companies, these factors are important for the predictability of investments (and are also indicators of countries’ performance): international competitiveness; efficient bureaucracy; a good tax system; training of people; a wide pool of human resources; exchange controls; labour productivity; government spending; level of corruption; infrastructural development; economic stability; crime; political stability. <ref>Mining, Minerals and Economic Development and the Transition to Sustainable Development in Southern Africa, Chapter 6.0 Globalisation & 7.0 Dutch Disease. Available from http://pubs.iied.org/pdfs/G00603.pdf</ref>
Some developing countries have experienced the so-called “Dutch Disease” which is “a name applied to the phenomenon experienced by countries which have a rich endowment of minerals, the result of which is that the economy of the country becomes heavily reliant upon the revenues received from mineral sales, at the expense of the growth of other industries.” From the point of view of businesses, including mining companies, these factors are important for the predictability of investments (and are also indicators of countries’ performance): international competitiveness; efficient bureaucracy; a good tax system; training of people; a wide pool of human resources; exchange controls; labour productivity; government spending; level of corruption; infrastructural development; economic stability; crime; political stability. <ref>Mining, Minerals and Economic Development and the Transition to Sustainable Development in Southern Africa, Chapter 6.0 Globalisation & 7.0 Dutch Disease. Available from http://pubs.iied.org/pdfs/G00603.pdf</ref>


This is visible under the local circumstances of the case study. Ghana is rich in natural resources but has low technological capacity to develop its mining industry. Large mining companies can bring in the technological innovation needed but their operations should ideally be supported and controlled by national institutions. If these are not fully functional in terms of administrative capability and transparent governance, then there is the risk that the environmental and other consequences of mining activities may be considered “externalities” and therefore will not be adequately addressed by foreign companies. In some cases, the local economy may not have the capacity to absorb large amounts of income from mining activities, which may in turn fuel corruption <ref>i.e. inadequate strategic planning regarding long-term sustainable economic development via the creation of some sort of ‘National Fund’, such as Norway did when it discovered large oil reserves in the 1970s, can lead directly to a ‘resource curse’ – sudden huge inflows of cash without proper oversight leading to enrichment of corrupt elites</ref>.  
This is visible under the local circumstances of the case study. Ghana is rich in natural resources but has low technological capacity to develop its mining industry. Large mining companies can bring in the technological innovation needed but their operations should ideally be supported and controlled by national institutions. If these are not fully functional in terms of administrative capability and transparent governance, then there is the risk that the environmental and other consequences of mining activities may be considered “externalities” and therefore will not be adequately addressed by foreign companies. In some cases, the local economy may not have the capacity to absorb large amounts of income from mining activities, which may in turn fuel corruption <ref>i.e. inadequate strategic planning regarding long-term sustainable economic development via the creation of some sort of ‘National Fund’, such as Norway did when it discovered large oil reserves in the 1970s, can lead directly to a ‘resource curse’ – sudden huge inflows of cash without proper oversight leading to enrichment of corrupt elites</ref>. [[File:Ghana Map.jpg|Ghana Map]]


Ghana has gone through rapid economic development (based on the resurgence of its mining industry since 1989) that was based on liberalization of the environment for private (foreign) investments. However, the benefit for the country was quite negative, as it has led to not only considerable social costs (growing conflicts with local mining communities) but also huge environmental costs. (Read <ref name=Akabzaa>Akabzaa, T., & Darimani, A. (2001). Impact of mining sector investment in Ghana: A study of the Tarkwa mining region. Draft Report prepared for SAPRI, Available from http://www.saprin.org/ghana/research/gha_mining.pdf</ref>, pp. 3-4)
Ghana has gone through rapid economic development (based on the resurgence of its mining industry since 1989) that was based on liberalization of the environment for private (foreign) investments. However, the benefit for the country was quite negative, as it has led to not only considerable social costs (growing conflicts with local mining communities) but also huge environmental costs. (Read <ref name=Akabzaa>Akabzaa, T., & Darimani, A. (2001). Impact of mining sector investment in Ghana: A study of the Tarkwa mining region. Draft Report prepared for SAPRI, Available from http://www.saprin.org/ghana/research/gha_mining.pdf</ref>, pp. 3-4)
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