Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
ECON 215 Introduction to Economy of Ghana Session 6 – Industrial Sector Part 1 Lecturer: Dr. Augustine Fritz Gockel Contact Information: [email protected] College of Education School of Continuing and Distance Education 2014/2015 – 2016/2017 Session Overview • Session Overview: The industrial sector of every economy is touted to be the engine of growth of that economy. This session seeks to introduce students to the concept of industrialisation and considers the industrial sector of Ghana. Goals/ Objectives: At the end of the session, the student will • Understand the concept of industrialisation • Understand the role of industrialisation in economic development • Know the characteristics of Ghana’s industrial sector • Know the institutions in Ghana which support industrial development in Ghana. Slide 2 Session Outline The key topics to be covered in the session are as follows: • Topic One: Industrialisation • Topic Two: Ghana’s Industrial Sector • Topic Three: Institutions and Industrial Development Slide 3 Reading List • Refer to students to relevant text/chapter or reading materials you will make available on Sakai Slide 4 Topic One INDUSTRIALIZATION Slide 5 What is Industrial Economics? • Industrial economics deals with economic problems of firms and industries and their relationship with society. • It may also be defined as the application of microeconomic theory to firms to the analysis of firms and industries. • The distinction between microeconomics and industrial economics is the latter’s emphasis on empirical work and on its implications for policy. • Industrial economists study the policies of firms towards rivals and towards consumers (which includes prices, advertising, and research and development) Slide 6 What is Industrialization? • Industrialisation is at the centre of development. Since the industrialisation revolution in Britain, industrialisation has been perhaps the single most profound change to the social and economic make-up of societies. • Industrialization is defined as the process in which there is transformation from the dependence on agrarian and handicraft to the dependence on an industrial sector driven economy. • Industrialization is normally interpreted as a process whereby the share of industry in general and manufacturing in particular, in total economic activity is increased. Slide 7 What is industrialisation Cont’d • Experience from the past 60-70 years suggests that industrialisaton has played a crucial role in development. Countries with rapidly growing industrial sectors have been able to handle developmental problems, particularly those of employment much more easily and effectively than those countries where industrialisation has lagged. • This does not imply that other sectors – particularly agriculture – can be neglected. On the contrary, if it is to be successful, industrialisation must have a symbiotic or co-operative relationship with other sectors, rather than growing at its own expense. • A large number of studies have shown a clear tendency for industrialisation to be associated with rising incomes, i.e., as per capita incomes increases so does the share of manufacturing in the national income. However, this does not prove causality. But an increase in the share of manufacturing in national income is conventionally taken as an important indicator of structural change at the macroeconomic level. Slide 8 Industrialisation and Development • There are two theoretical perspectives that have been dominant in the studies of development in the last four decades: a. Structural approach to industrialisation – linked to more protective policies to nurture growth of industry. b. Neo-classical approach to industrialisation – linked to more market-oriented policies. These two macro theories of economic development can be directly related to strategies or models of industrialisation. Slide 9 Industrialisation and Development • Structuralists would argue for state intervention in industrialisation, be it regulation of trade tariffs or direct production by the state companies. Neoclassicals however argue that the market left on its own devices is a far more efficient arbiter of economic development. • Structuralists argue the importance of greater self-reliance of developing countries whereas the Neo-classicals put emphasis on the integration with the world economy. • Self-reliance led to policies of import substitution, where goods formerly imported would be produced locally. Structuralists argued that this can only be achieved if industries are protected from outside competition at least in its initial stage or infant industry phase. • Integration into the world on the other hand implies an emphasis on exportoriented industrialisation. Neo-classicals argue that export can only compete with world market prices if production is not hindered by price controls such as trade tariffs Slide 10 Topic Two GHANA’S INDUSTRIAL SECTOR Slide 11 Major Characteristics of the Industrial Sector • The most important sub-sectors within the industrial sector are over dependent on imported raw materials. It is estimated that about 45% of inputs used by these firms are imported. The locally produced raw materials are also costly. • Most of the firms have low capacity utilisation i.e. they are producing below their capacity in relation to their installed plants. This is attributed to outmoded machinery and equipment. • Firms are predominantly small scale or at best medium sized industries. As a result they are not able to enjoy economies of scale associated with large scale production Slide 12 Major Characteristics of the Industrial Sector Cont’d • Low level of indigenous ownership and control because of difficulty in financing industrial projects. • Majority of the firms are located in the urban centers like Accra, Tema, Kumasi and Takoradi partly because of the under-development of infrastructure in other parts of the country. • Many of the firms lack well trained and qualified managerial staff, and low level of training of enterpreneurial staff. Thus, there is a high level of usage of causal workers and apprentices. Also, most firms do not depend on research. Slide 13 Composition of the Industrial Sector • The industrial sector of the Ghanaian economy comprises manufacturing, mining and quarrying, electricity generation and distribution, water and sewerage, construction subsectors. Some of these categories such as the manufacturing and the mining and quarrying have sub-sectors. • Manufacturing Sub-Sector consists of : i. Manufacture of food products and beverages ii. Manufacture of wood and articles of straw etc. iii. Manufacture of coke, refined petroleum products etc. iv. Manufacture of chemicals and chemical products v. Manufacture of other non-metallic min. products vi. Manufacture of basic metals vii. Manufacture of rubber and plastics products Slide 14 Composition of the Industrial Sector Cont’d viii. ix. x. xi. xii. xiii. Manufacture of electrical machinery and apparatus n.e.c. Manufacture of motor vehicles, trailers and semi-trailers Manufacture of furniture; Manufacture of textiles Manufacture of paper and paper products Publishing, printing and reproduction of rec. Media • Mining and Quarrying subsector comprises: i. Mining of nonferrous metal ores ii. Quarrying of stone, sand & clay Slide 15 Topic Three INSTITUTIONS AND INDUSTRY DEVELOPMENT Slide 16 Introduction • The major public and private institutions involved in the industrial development in Ghana include: i. Ministry of Trade and Industry (MOTI) ii. National Board for Small Scale Industries (NBSSSI)(NBSSI) iii. Ghana Regional Appropriate Technology Industries Services (GRATIS) iv. Council for Scientific and Industrial Research (CSIR) v. State Enterprise Commission (SEC) vi. Private Enterprise Foundation (PEF) vii. Association of Ghanaian Industries (AGI) viii. Ghana Chamber of Commerce and Industry (GCCI) Slide 17 Ministry of Trade and Industry (MoTI) • The Ministry of Trade & Industry is the lead policy advisor to government on trade, industrial and private sector development with responsibility for the formulation and implementation of policies for the promotion, growth and development of domestic and international trade and industry. • The Ministry is also the advocate for the private sector within government and is the principal agency responsible for monitoring and implementing the Government’s private sector development programmes and activities. • In industry, the Ministry’s policy thrust continues primarily to be the development of a more competitive industrial sub-sector with potentials to make in-roads into the international market with value added local products derived from local resources Slide 18 National Board for Small Scale Industries (NBSSI) • The National Board for Small Scale Industries (NBSSI) is the apex governmental body for the promotion and development of the Micro and Small Enterprises (MSE) sector in Ghana . It was established by an Act of the Parliament of the Third Republic of Ghana (Act 434 of 1981) and operationalised in 1985 because government views the sector as having the potential to contribute substantially to reducing the high unemployment and to the growth of the economy of Ghana. • MSEs account for a significant share of economic activity in Ghana and can play an important role in achieving the development goals for production. The long-term goal is for MSEs to maximize their contribution to the country’s economic and social development with respect to production, income distribution and employment and the closer integration of women and people in rural areas with the national economy. Slide 19 National Board for Small Scale Industries (NBSSI) Cont’d • In order to create a single dynamic integrated organization adequately capitalized and capable of responding to the needs of the small-scale enterprises sector, the Government merged the Ghanaian Enterprises Development Commission (GEDC) in 1991 and the Cottage Industries Division of the Department of Rural Housing and Cottage Industries in 1994 with the Board. • Based on Parliamentary Act 434 establishing NBSSI and NRCD 330 (the GEDC promulgation Instrument) the following objectives guide the operations of NBSSI: To contribute to the creation of an enabling environment for the small-scale enterprises development. To contribute to the development of an enterprise culture in Ghana. Facilitate MSEs access to substantial and high quality Business Development Services for their development. To Promote MSE sector Associations. To facilitate access to credit for small enterprises i. ii. iii. iv. v. Slide 20 Ghana Regional Appropriate Technology Industry Services (GRATIS) • GRATIS Foundation evolved out of the Ghana Regional Appropriate Technology Industrial Service (GRATIS) Project, was established by the Government of Ghana in 1987 and mandated to promote small-scale industrialisation in Ghana. • To accomplish this mandate, GRATIS established Intermediate Technology Transfer Units (ITTUs) now designated Regional Technology Transfer Centres (RTTCs) in nine regions of Ghana to transfer appropriate technologies to small-scale industrialists through training, manufacturing and the supply of machine tools, plants and equipment. • Instead of phasing out GRATIS after the establishment of the RTTC network, the Government and other stakeholders agreed that it should be incorporated as a company limited by guarantee called GRATIS Foundation. Slide 21 Ghana Investment Promotion Centre (GIPC) • • The Ghana Investment Promotion Centre (GIPC) is a Government agency, responsible under the GIPC Act, 2013 (Act 865): to encourage and promote investments in Ghana, to provide for the creation of an attractive incentive framework and a transparent, predictable and facilitating environment for investments in Ghana. Object The object of the Centre is to ; (a) Create an enhanced, transparent and responsive environment for investment and the development of the Ghanaian economy through investment; and (b) Encourage, promote and facilitate investment in the country. Functions For the purposes of attaining its objects, the Centre shall, actively encourage, promote and facilitate investments into and within Ghana and shall: Slide 22 Ghana Investment Promotion Centre (GIPC) Cont’d (a) formulate investment promotion policies and plans, promotional incentives and marketing strategies to attract foreign and local investments in advanced technology industries and skill-intensive services which enjoy good export market prospects; (b) initiate and support measures that will enhance the investment climate in Ghana for both Ghanaian and non-Ghanaian enterprises; (c) initiate, organise and participate in promotional activities such as exhibitions, conferences and seminars for the stimulation of investments, to present Ghana as an ideal investment destination; (d) collect, collate, analyse and disseminate information about investment opportunities and sources of investment capital, incentives available to investors, the investment climate and advise upon request on the availability, choice or suitability of partners in joint venture projects; Slide 23 Ghana Investment Promotion Centre (GIPC) Cont’d (e) register, monitor and keep records of all enterprises in Ghana; (f) register and keep records of all technology transfer agreements; (g) identify specific projects and prepare project profiles on investments and joint venture opportunities in Ghana and attract interested investors for participation in those projects; (h) bring about harmonisation in investment policy formulation through coordination of the activities of all other institutions and agencies; and (i) perform any other functions that are necessary for the attainment of the object of Act 865 Slide 24 Council for Scientific and Industrial Research (CSIR) • The Council for Scientific and Industrial Research (CSIR) is the foremost national science and technology institution in Ghana. It is mandated to carry out scientific and technological research for national development. The Council was established in its present form by NLC Decree 293 of 10th October, 1968 and re-established by CSIR Act 521 of 26th November, 1996. • The Council, however, traces its ancestry to the erstwhile National Research Council (NRC), which was established by the Research Act 21 of August, 1958, a little over a year after independence, to organize and co-ordinate scientific research in Ghana and provide the necessary platform for Ghana’s accelerated development. Slide 25 Council for Scientific and Industrial Research (CSIR) MANDATE: • The CSIR is mandated to pursue, among others, the implementation of government policies on scientific research and development, coordinate R&D activities in the CSIR and other S&T institutions nationwide and assist the government in the formulation of S&T policies for national development. • The CSIR is further required to commercialize appropriate technologies, in partnership with the private sector and other stakeholders, and encourage in the national interest, scientific and industrial research of importance for the development of agriculture, health, medicine, environment, technology and other service sectors of the economy Slide 26 State Enterprise Commission (SEC) • The beginning of what is now the State Enterprises Commission is traceable to the State Enterprises Secretariat, which was incorporated in 1965 under Legislative Instrument (L.I. 47). • The Secretariat was tasked to promote within the framework of Government policy, the efficient and profitable operation of Statutory Corporations engaged in trade and industry. Slide 27 Association of Ghana Industries (AGI) • The Association of Ghana Industries (AGI) is a voluntary business association of over 1200 members, made up of small, medium and large scale manufacturing and services industries in agro-processing (food and beverages), agri-business, pharmaceuticals, electronics and electrical, telecommunications, information technology, utilities, service industries, transport, construction, textiles, garments and leather, banking and advertising. • As the leading voice of manufacturing industries in the country, AGI is dedicated to: Advocating policies that advance the growth and development of industries; Facilitating international trade through exhibition of member products in countries across the sub-region; Strengthening national industry associations through the sharing of knowledge, experience and critical information; Providing members with a vast network of contacts, especially in the West African sub-region; Hosting the industry and technology exhibition to promote members’ goods. i. ii. iii. iv. v. Slide 28 Private Enterprise Foundation (PEF) • The Private Enterprise Foundation (now Federation) was established in 1994 as the apex institution to forge consensus and provide the leadership voice for advocacy, on the initiative of the Association of Ghana Industries, Ghana National Chamber of Commerce and Industry, Ghana Employers’ Association, and the Federation of Associations of Ghanaian Exporters; with the support of the United States Agency for International Development (USAID). • The Ghana Association of Bankers (GAB) was later admitted as the fifth founding member and the Ghana Chamber of Mines (GCM) was also added as a member later on. Four (4) new members namely, Ghana Chamber of Telecommunications (GCT), the Ghana Insurers’ Association (GIA), the Association of Oil Marketing Companies (AOMC’s) and the Liquefied Petroleum Gas Operators Association (GLiPGOA) have joined the Federation as full-fledged members since October 2012. Slide 29 Private Enterprise Foundation (PEF) Cont’d • MISSION: The mission of PEF is to service the development needs of the private sector through advocacy for efficient allocation of the country’s resources, provision of requisite business development support services and capacity building for a sustainable private sector led national economic development. • VISION: Influence Government Policy direction prioritizing private sector driven economic and social development for an improved and consistent investment climate and enabling environment, for globally competitive and thriving private sector operations. Slide 30 Ghana Chamber of Commerce and Industry (GCCI) • The Ghana Chamber of Commerce and Industry is an association of business operators, firms and industries with interests spanning every sector of private enterprise in Ghana. As an advocacy organization, the GCCI was established with the prime objective of promoting industrial and commercial interest in the country. • The Chamber represents the voice of the business community with total commitment to playing a leadership role towards propelling Ghana’s economy to higher heights. To this end, the Chamber has and will continue to influence government policies which will be to the benefit of the private sector whiles promoting the overall development of the Ghanaian economy. Slide 31 References Slide 32