FOSTERING AN ECONOMIC LINKAGE BETWEEN INDIGENOUS GHANAIAN FIRMS AND LOCAL CONTENT POLICY IMPLEMENTATION: A CRITICAL REVIEW

Abstract

The desire to use the extractive industry as a catalyst to provide an enhanced and positive economic breakthrough for resource-rich countries continues to be at the forefront of the debate on natural resource abundance and development. After several years of concentrating on fiscal policies as a means for accomplishing positive impact, local content policies (LCPs) have re-emerged as one of the tools that could allow linkages within the extractive sector in developing economies, particularly those in Africa. By integrating extensive literature on the subject under investigation, this paper critically analyses whether Ghana’ LCP implementation has been able to foster an economic linkage between indigenous Ghanaian-owned firms in the upstream sector. Our critique also seeks to ascertain if the development of LCP has been an efficient springboard in leveraging development transformation. Following on from other studies on LCPs, it is widely argued that local content policies can be a useful strategy for resource-rich countries in their quest for economic transformation, but this assertion appears to be vague as local content policy implementation and its cascading ramifications on indigenous businesses have produced mixed results. What this means is that local content policy implementation strategies differ from country to country and so no single policy will fit for all as some countries focus on various areas based on their level of development and economic aspirations. This paper offers observations and insights for rethinking theoretical approaches that can help establish the linkages between local content policy implementation and its implications on indigenous firms.