16.03.2006 Business & Finance

Mining companies become richer yet communities still poor

16.03.2006 LISTEN

Accra, March 16, GNA - Professor Ernest Aryeetey, Director of Institute of Social Statistics and Economic Research (ISSER), has noted that even though incomes of mining companies had increased over the years, its impact on mining communities had been minimal. He said despite the roll-on effect of globalization in all sectors of the economy, mining, one of the major areas of foreign direct investment had not resulted in the transfer of knowledge and technology to local staff of the companies since most of the high level positions were held by expatriates.

"The usual excuse is that local staffs do not have the required knowledge and expertise to carry on the job requirements," Prof Aryeetey said at the first in a series of seminars organized by ISSER and the Merchant Bank in Accra. Speaking on: "Globalization, Poverty and Sustainable Development", Prof Aryeetey said the use of technology in the globalization drive though significant had not helped much in addressing the issues since technology transfer had not impacted in building skills for the local staff to overcome their difficulties in farming, building technology and health.

Prof Aryeetey argued that if it did much at all, it resulted in the drastic reduction in the number of staff of most of the institutions that adopted the technology. He said "while there has been significant growth in the presence of multinational firms in developing countries, there have also developed a significant number of NGOs, decentralized public institutions and indigenous structures for social capital formation in rural communities largely intended to make life more bearable for groups that may have been adversely affected by growth in the local and external economies". He quoted the use of social responsibility acts by certain firms to polish up the inadequacies that their production processes coughed up.

Prof. Aryeetey questioned whether globalization had any positive impact at all on rural households. On external trade, Prof Aryeetey said even though the element of external trade in globalisation had seen tremendous growth in the last decade, "this has not been seen in the case for sub-Saharan Africa. The ratio of world trade to GDP has doubled since the 1960s, but within this expansion in international trade, the ratio of merchandise exports to GDP rose from 11 per cent to 18 per cent while the share of primary products in total trade was halved and that of manufacture rose. He said while those developments took place, the share of sub-Saharan Africa in world trade had fallen over three per cent in the 1960s to less than two per cent currently.

"Taking out South Africa, this share is only 1.2 per cent. There has been very little diversification. It is estimated that for this region alone, the erosion of world trade share between 1970 and 1993 has meant a loss of 68 billion dollars being 21 per cent of GDP. Prof Aryeetey said that while trade here had hardly grown, declining terms of trade and various external shocks continued to make countries vulnerable. He wondered whether growing external trade posed any threat to or increased risks associated with the rural environment. To countries that exported largely primary products, the biggest threat is how the probably expanded demand for primary commodities would affect the environment in the absence of appropriate safeguards. "It is unlikely," he said, "that national governments have adequate opportunity to prepare for this since as more land is brought under cultivation for export crops, only marginal lands become available for domestic food production at the expense of environmental considerations.

"There may be threats to commodity prices following glut situations in the short term in an effort to meet the challenges of the new expansion in world demand for the export items, while the likelihood of paying little attention to other aspects of rural community development increases rapidly." He noted that the relevant technologies for African economies were those that would facilitate food and crop production and also assist in the storage and processing as this would affect rural production through an alteration of production techniques and as a consequence a change in production relations. Prof Aryeetey expressed regret that the numerous researches conducted through the application of technology had not helped Ghana to meet increased yields in food and cash crop production consistently while land use and application had not supported the country in any way.

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