The role of foreign resources component and the growth of the manufacturing sub-sector

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Industrialization in Ghana proceeded on the basis of import substitution industrialization (ISI). This strategy, in the process led to the over reliance on foreign raw materials and technology, which eventually failed to relieve the economy from the importation of foreign products. The research was meant to find out whether recent attempt at industrialization (which is focused on foreign resources) has shifted emphasis from factors that militated against the success of the ISI policy. The ‘before and after’ method of analysis was employed, which focused on the Economic Recovery Programme era with particular emphasis on the Structural Adjustment Programme period. A total of 50 medium and large-scale firms were selected as the sample frame from a total population of 99 firms. Information was collected through the administration of questionnaires from the sampled firms and other Secondary data. Tool of analysis were statistical tables, graphs, charts, regression and correlation tools. The Kumasi Metropolis was chosen as the study area. The study showed that the amount of foreign resources inflow to manufacturing is far below expectation and as a result, its influence on manufacturing growth is not phenomenal. Besides, there is continuous over reliance on foreign technology and raw materials as existed in the 1ST era. Again, Manufacturing Capacity utilization is still low and exports are restricted to only the wood and wood products sub-sector. Furthermore, the macro environment is still not favourable for manufacturing growth. However, it was observed that as a result of foreign investments, the ownership structure of manufacturing has changed in favour of the private sector. Also, there is improvement in the level of employment and a lot of firms were using modern machinery by the year 2000. In the circumstances, it is recommended that, policy makers should work toward a favourable macro- economic environment, there should be an aggressive investment promotion to attract more investors into the sub-sector, and government should establish an investment fund to complement any foreign capital that may flow into manufacturing. In addition, the stock exchange should be strengthened to enable manufacturers have access to long-term capital; government should support manufacturers to export more and encourage the development of local technology and raw materials. In spite of the unquestionable role that foreign resources can play, it is only when these recommendations together with others are implemented that we can reap its full benefits.
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the award of Master of Science in Development Policy and Planning, 2001