TITLE:
Sparkling Reality: Can Foreign Direct Investments Alone Revive the Akwatia Diamond Mine and Diamond Exports in Ghana?—A Cointegration Analysis
AUTHORS:
Ze Tian, Enoch Kwaw-Nimeson, Grace Opoku Onyinah
KEYWORDS:
Diamond, Diamond Sector, Akwatia Diamond Mine, Cointegration, Foreign Direct Investments
JOURNAL NAME:
Open Journal of Business and Management,
Vol.7 No.4,
September
30,
2019
ABSTRACT: The Akwatia Diamond Mine has been responsible for most of the diamond-related
activities in Ghana. This study analyses the factors responsible for the recent
lack of investments inflows into the Mine and also assesses diamond export
performance in Ghana using the annual time series data from 1987 to 2018. The
Gravity Model, a well-known model for trade flow analyses is employed into the
study to assess the relationship between diamond exports and foreign direct
investments as well measure its impact on gross domestic product, diamond
price, real effective exchange rate and inflation rate. The study found a
positive but insignificant impact of foreign direct investments on diamond
export over the period under study in the long run and also reports little or
no direct impact on diamond exports in the short run. The study recommends that
the Government of Ghana should introduce punitive laws and regulations to guide
the next Akwatia Diamond Mine divestiture to avoid a repeat of the past
divestiture failures. Additionally, the study recommends that the Government of
Ghana should reconsider lifting the ban on artisanal diamond mining and rather
formulate and adopt policies to manage and supervise their activities to boost
diamond production, exports and revenue.