The mineral sector and economic development in Ghana: A computable general equilibrium analysis

A computable general equilibrium model (CGE) model is formulated for conducting mineral policy analysis in the context of national economic development for Ghana. The model, called GHANAMIN, places strong emphasis on production, trade, and investment. It can be used to examine both micro and macro economic impacts of policies associated with mineral investment, taxation, and terms of trade changes, as well as mineral sector performance impacts due to technological change or the discovery of new deposits. Its economywide structure enables the study of broader development policy with a focus on individual or multiple sectors, simultaneously.;After going through a period of contraction for about two decades, mining in Ghana has rebounded significantly and is currently the main foreign exchange earner. Gold alone contributed 44.7 percent of 1994 total export earnings. GHANAMIN is used to investigate the economywide impacts of mineral tax policies, world market mineral prices changes, mining investment, and increased mineral exports. It is also used for identifying key sectors for economic development.;Various simulations were undertaken with the following results: Recently implemented mineral tax policies are welfare increasing, but have an accompanying decrease in the output of other export sectors. World mineral price rises stimulate an increase in real GDP; however, this increase is less than real GDP decreases associated with price declines. Investment in the non-gold mining sector increases real GDP more than investment in gold mining, because of the former's stronger linkages to the rest of the economy. Increased mineral exports are very beneficial to the overall economy. Foreign direct investment (FDI) in mining increases welfare more so than domestic capital, which is very limited. Mining investment and the increased mineral exports since 1986 have contributed significantly to the country's economic recovery, with gold mining accounting for 95 percent of the mineral sector's contribution. The mining sector in general is identified as a leading sector for economic development.