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Working Paper 147 - Gold Mining in Africa-Maximizing Economic Returns for Countries

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    Abstract

    This paper investigates the maximization of economic returns from mining for African countries. We focus on gold mining, a significant sector in at least 34 African countries. Our point of departure in the paper is the well-documented reality that a large number of resource-rich African countries have benefited little from their resource endowments. This group includes many gold-producing countries. Part of the reason for this state of affairs is the fact that countries have received smaller shares of the rents generated from the sector. Furthermore, those shares have not always been efficiently utilized. We carry out some analysis to provide evidence showing that royalty rates (a major source of revenues from the gold mining sector) in the region can be increased to enable countries to better profit from the sector while allowing firms to realize reasonable returns on their investments. The paper also provides some policy recommendations to not only increase regional countries' share of the resource rent from mining but also to ensure that the revenues received are better allocated.

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    File URL: http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/WPS%20No%20147%20Gold%20Mining%20in%20Africa%20Maximizing%20Economic%20Returns%20for%20Countries%20120329.pdf
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    Bibliographic Info

    Paper provided by African Development Bank in its series Working Paper Series with number 378.

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    Date of creation: 03 Apr 2012
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    Handle: RePEc:adb:adbwps:378

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    1. Roland Hodler, 2004. "The Curse of Natural Resources in Fractionalized Countries," Diskussionsschriften dp0404, Universitaet Bern, Departement Volkswirtschaft.
    2. R. Quentin Grafton, 2007. "Economic Development & Environmental Sustainability: New Policy Options - Edited by Ramón López and Michael A. Toman," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 347-349, 09.
    3. Bulte, Erwin H. & Damania, Richard & Deacon, Robert T., 2005. "Resource intensity, institutions, and development," World Development, Elsevier, vol. 33(7), pages 1029-1044, July.
    4. Heaps, Terry, 1985. "The taxation of nonreplenishable natural resources revisited," Journal of Environmental Economics and Management, Elsevier, vol. 12(1), pages 14-27, March.
    5. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Institutions and the resource curse," Development and Comp Systems 0210003, EconWPA.
    6. James Otto & Craig Andrews & Fred Cawood & Michael Doggett & Pietro Guj & Frank Stermole & John Stermole & John Tilton, 2006. "Mining Royalties : A Global Study of Their Impact on Investors, Government, and Civil Society," World Bank Publications, The World Bank, number 7105, October.
    7. Saji Thomas, 2010. "Mining Taxation," IMF Working Papers 10/126, International Monetary Fund.
    8. Deacon, Robert & Mueller, Bernardo, 2004. "Political Economy and Natural Resource Use," University of California at Santa Barbara, Economics Working Paper Series qt68g1n1v8, Department of Economics, UC Santa Barbara.
    9. Kolstad, Ivar & Søreide, Tina, 2009. "Corruption in natural resource management: Implications for policy makers," Resources Policy, Elsevier, vol. 34(4), pages 214-226, December.
    10. Bevan, David & Collier, Paul & Gunning, Jan Willem, 1993. "Trade shocks in developing countries: Consequences and policy responses," European Economic Review, Elsevier, vol. 37(2-3), pages 557-565, April.
    11. Akpalu, Wisdom & Parks, Peter J., 2007. "Natural resource use conflict: gold mining in tropical rainforest in Ghana," Environment and Development Economics, Cambridge University Press, vol. 12(01), pages 55-72, February.
    12. Raddatz, Claudio, 2007. "Are external shocks responsible for the instability of output in low-income countries?," Journal of Development Economics, Elsevier, vol. 84(1), pages 155-187, September.
    13. Ayee, Joseph & Soreide, Tina & Shukla, G. P. & Le, Tuan Minh, 2011. "Political economy of the mining sector in Ghana," Policy Research Working Paper Series 5730, The World Bank.
    14. Thomas Baunsgaard, 2001. "A Primeron Mineral Taxation," IMF Working Papers 01/139, International Monetary Fund.
    15. Michael Lokshin, 2006. "Difference-based semiparametric estimation of partial linear regression models," Stata Journal, StataCorp LP, vol. 6(3), pages 377-383, September.
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