Diamond Exports Research Articles

Rich and poor: How political governance crises have affected the relationship between diamond exports and economic growth in the Central African Republic

AbstractThis article examines the role played by political governance crises in the relationship between diamond exports and economic growth in the Central African Republic over the period 1978 to 2010. We used changes in constitution and government and politico‐military crises (including tensions, violence, and politically motivated protests) as proxies for a political governance crisis. The Autoregressive Distributed Lag Model and Bound Test for cointegration are employed to establish short‐run and long‐term relationships. The results show different impacts of the proxy of political governance crises in the relationship between diamond exports and economic growth. We argue that, in a bid to ensure that diamonds fuel economic growth, improving governance of the mining sector and the political governance environment must become a core priority of the country's development strategy.Related ArticlesAntwi‐Boateng, Osman, and Mamudu Abunga Akudugu. 2020. “Golden Migrants: The Rise and Impact of Illegal Chinese Small‐Scale Mining in Ghana.” Politics & Policy 48(1): 135–67. https://doi.org/10.1111/polp.12342.Pelizzo, Riccardo. 2020. “Good Governance and Party System Change.” Politics & Policy 48(2): 265–87. https://doi.org/10.1111/polp.12347.Tusalem, Rollin F. 2016. “The Effect of Historical Pact Making and Civic Associations on Democratic Outcomes.” Politics & Policy 44(4): 712–50. https://doi.org/10.1111/polp.12166.

Capital flight and diamond exports in the Central African Republic: The role of political governance crisis

AbstractThe purpose of this paper is to examine the relationship between capital flight, diamond exports and political governance crisis in the Central African Republic. To achieve this, use is made of multiple correspondence analysis to construct a political governance crisis index, and the Autoregressive Distributed Lag Model and Bound test for co‐integration are employed to establish short‐run and long‐run relationships. The short‐run results show political governance crisis and diamond exports have a significant and negative effect on capital flight. The interaction term between diamonds exports and political governance crisis is found to be positively related to capital flight in the short run. The long‐run equilibrium shows a significant and negative relationship between political governance crisis, diamond exports, and gross domestic product growth even though the interaction between political governance crisis and diamond exports show a positive and significant relationship. The total natural resource rent is found to be positively related to capital flight but not statistically significant. It is then recommended that a combination of stable political governance associated with reducing corruption in public affairs and promoting transparency in the management of the diamond sector be strengthened to effectively reduce the flight of capital.

Sparkling Reality: Can Foreign Direct Investments Alone Revive the Akwatia Diamond Mine and Diamond Exports in Ghana?—A Cointegration Analysis

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.

Botswana

This Selected Issues paper examines the stability of the financial sector in Botswana. The financial system has grown rapidly over the years, but there is still substantial scope for expansion. Banks, institutional investors, and the Botswana Stock Exchange have grown steadily over the years based on political and economic stability, savings from diamond exports, and fiscal surpluses. Botswana’s financial stability framework could benefit from upgrading. Data gaps and incomplete information on cross-border capital flows and growing interconnection with the nonbank financial sector may entail risks. In this regard, close cooperation among regulators and proper assessment of macro-financial risks associated with banks’ large exposures will contribute to more effective financial system supervision.

Capital Flight and Trade Misinvoicing in Zimbabwe

AbstractThis paper estimates trade misinvoicing in Zimbabwe from major trading partners using the Morgenstern () methodology. It uses trade data from 1980 to 2014 from the United Nations Commodity Trade Statistics Database. The results show that unrecorded capital outflows occur through trade with different countries including Italy, United States, Germany, and China, while unrecorded capital inflows into Zimbabwe are mainly from South Africa, Belgium, and Australia. Trade misinvoicing occurs mostly in exports of diamonds, gold, and nickel. Misinvoicing through imports is not rampant and occurs mostly through Germany, South Africa, and Zambia. The results show that capital flight increased during the period of macroeconomic and political instability. This indicates the need to ensure political and macroeconomic stability to reduce capital flight.

A Study of Customer Satisfaction on Services Provided by International Gemological Institute (IGI) Surat

Diamond industry, gems and jewelry sector, apart from being one of the fastest growing sectors in India is a major contributor to the GDP of the country. With an enormous market size and exceptional potential of expansion, the gem and jewelry sector is poised to become twice as huge as of now in coming five years. India accounts for 70-75 percent diamond exports of the world making it the largest cutting hub both in terms of value and employability. International Gemological Institute is the apex body in certifying gems and jewelry on the grounds such as authenticity, purity and alike is responsible for building confidence among the buyers as well as the seller community dealing in these rare gems and metals. The institute has a well webbed network of research laboratories in different parts of the world consisting of some of the prominent cities in India to carry out quality check and certification procedures. The paper reflects satisfaction level among the customers that avails the services provided by IGI that not only acts as certification of quality and authenticity but also as the prime element of trust among the trading group. The study has been conducted using a primary data collection tool and the data was collected from owners & staff of various firms who came for the authenticity evaluation of their diamonds, gems and jewelry, whose findings were later tested by chi square test and cross-tabulation. The findings give us an idea about the acceptance and rejections of various associations among the variables under study.

The Emergence of the Informal Sector Firms in International Business: The Globally Distributed Indian Diamond Industry

This paper highlights and explores the emergence of sector firms (ISFs) in international business. Due to the increasing size and significance of economy in the global context (particularly emerging markets), we also attempt to understand the characteristics and relevance of these ISFs. The globally distributed diamond industry is one such instance, composed of thousands of sector entrepreneurial firms (ISFs) which export cut and polished diamonds (CPD) worth USD 20 billion annually. However, these firms thrive in the atmosphere of secrecy and informality that envelops the diamond trade and has for long been labeled as an unorganized sector in the world economy. Interestingly, the collective output of the ISFs in an emerging economy (India) enjoy a 95 percent market share of net global exports of cut and polished diamonds. This study reveals that networking of the Indian ISFs of the CPD industry resembles a close knit community which works on mutual trust, verbal commitments and familial and personal relationships mostly with systems in place. The so called unorganized CPD firms are possibly a different form of organizing which we call the informal sector firm and are clearly well-organized and enormously successful in international business despite lack of formal systems and formal education of their people.

Anatomy Of The Southern African Customs Union: Structure And Revenue Volatility

This paper studies the evolution of the Southern African Customs Union (SACU), tracing it from its inception in 1889 as the Customs Union Convention, the worlds first customs union, to its current status. While the union has operated under different agreements, which have been negotiated and renegotiated with changing circumstances, the study identifies the agreements of 1889, 1910, 1969 and 2002 as key to the unions transformation. It is observed that SACU has evolved from a geopolitical organisation with a repressive colonial foundation to a well-integrated regional trading bloc that is perceived as a possible springboard for larger regional trading blocs in Africa. The study further explores evidence of declining SACU revenue and investigates its implications on government expenditures in the small members of the union; namely, Botswana, Lesotho, Namibia and Swaziland (BLNS countries). It is found that among the members of the union, Lesotho and Swaziland are the most dependent on SACU transfers and, consequently, the most vulnerable to the current downward trend in SACU revenue. While Namibia has traditionally relied on diamond exports, it has also been receiving large SACU transfers relative to its GDP. In addition, the study observes that the present SACU revenue sharing formula adopted in 2002 exposes the BLNS countries to instabilities arising from global business cycles more than it does South Africa.

Imported Capital Goods and Manufacturing Productivity: Evidence from Botswana's Manufacturing Sector

AbstractThis article examines the effects of imported capital goods on manufacturing productivity growth in Botswana. Despite consistent efforts aimed at diversification, Botswana's economy has remained heavily dependent on diamond exports, and the country's productivity remains a point of concern. The ability to apply foreign technologies to increase productivity and spur diversification is limited by the foreign exchange gap. This study uses an imported input growth model to analyse how the importation of capital goods contributes to enabling productivity growth and export diversification. With a panel of 340 manufacturing firms, the study also analyses the effects of imported capital goods on firm productivity growth and skills development. The results show that imported machines and equipment have increase manufacturing productivity after 1‐2 years following the investment. Additionally, foreign‐owned firms were found to enjoy more productivity growth than their domestic counterparts.

Diamond Exploration and the San in Namibia: Toward a Legal History

Abstract The Ju/'hoansi are a poor people with few resources living in the Kalahari Desert along the border between Namibia and Botswana. In Namibia, 200 of them occupy their traditional lands in the Nyae Nyae Conservancy, living under customary law with some measure of control over their lands. Diamond exploration occurs in many parts of Namibia but includes substantial instrusion on Ju/'hoansi lands, with almost no legal protections. Namibia, as a developing nation with its own problems, relies extensively on diamond exports and has a mining law that encourages these explorations. In a world with increasing demands on natural resources, existing legal regimes to protect indigenous peoples are inadequate.

From carats to karats: explaining the shift from diamond to gold mining by artisanal miners in Ghana

Over the course of the past half-decade, artisanal miners in Ghana’s major alluvial diamond fields of Akwatia have shifted to gold mining or a combination of gold and diamond mining. What accounts for such an unprecedented transition in the country’s artisanal and small-scale mining (ASM) sector? Drawing upon in-person interviews and observations conducted in Ghana’s mining regions, the article identifies two primary explanatory factors for this shift. First, the cessation of large-scale diamond mining in the country has witnessed the transformation of Akwatia’s small-scale diamond miners into small-scale gold miners. Second, the temporary ban upon Ghanaian exports of diamonds in late-2006 and the implementation of more stringent production and export regulations under the auspices of the Kimberley Process Certification Scheme have increased the costs of small-scale diamond mining. Moreover, several abetting factors such as favourable geological terrain, the increasing number of informal partnerships struck among customary land owners and illegal artisanal miners, soaring gold prices, and the rising input costs of diamond mining have accelerated this change in Ghana’s artisanal small-scale mining sector. Unable to obtain alternative employment, artisanal miners have successfully adapted to the changes in the regulatory and economic environments and, in doing so, have set in motion self-sustaining dynamics that have significantly transformed the political economy of mining in Ghana. Specifically, the changing patterns of mining have resulted in an increased use of mercury by artisanal workers and concomitant environmental degradation; the weakening of the regulatory framework of the Kimberley Process that oversees diamond mining in Ghana; the modest recovery of the livelihoods of mining communities; an increase in the net migration into the mineral-rich region of Akwatia; and the development of innovative artisanal mining technologies.

A 'Kimberley protest': Diamond mining, export sanctions, and poverty in Akwatia, Ghana

The temporary suspension of diamond exports in Ghana in 2006 and 2007 is arguably the most significant move to address mounting criticisms of the Kimberley Process Certification Scheme (KPCS), an international initiative aimed at stemming the flow of rough diamonds used to finance wars. The ban, which took effect in November 2006, was much praised, particularly in civil society circles, where it continues to be seen as a genuine effort to prevent the smuggling of ‘conflict diamonds’. At the time, Ghana was accused of harbouring stones originating from rebel-held territories in neighbouring Cote d’Ivoire. No evidence was found in support of the case that it was a repository for ‘conflict diamonds’, however, and exports resumed early in March 2007. This article examines the context for the accusations of Ghana’s implication in the smuggling of illicit diamonds, and draws on recent fieldwork to explain how the suspension has affected Akwatia, the country’s main diamondiferous area. The actions taken raise important questions about how suspected violators – particularly smaller diamond-producing nations – of the KPCS should be handled, and underscore how global compacts can have a host of negative repercussions at the village level.

Blood diamonds: international policy options for conflict resolution

PurposeThe purpose of this paper is to examine the effects of four policy options for the international community to help resolve conflicts involving black diamonds: foreign aid, a tax arms exports, a tax on blood diamond and a tax on diamond exports in general from the war zones.Design/methodology/approachA trade‐theoretic model of two open economies which are in conflict with each other was constructed. War efforts, which involve the use of soldiers and arms, are determined endogenously. The purpose of war is the capture of land containing a natural resource like diamond, but the costs are that lives are lost and production sacrificed. The capture of mining land helps to reinforce the war by using profits from the sale of the natural resource to purchase arms.FindingsThe paper identifies the role of the “protective” nature of arms, and of income effects of the policy instruments, on the results. For example, foreign aid is found, unambiguously, to increase war when the entire profit from the sale of blood diamond is used to buy arms. But, when the proportion of profits from blood diamond used to buy arms is chosen optimally, foreign aid increases war efforts when arms are significantly protective of soldiers' lives.Social implicationsThis paper helps to understand conflicts, the resolutions of which have serious social implications for the conflict‐torn areas of the world.Originality/valueThis paper provides the international community with an analysis of policy options for dealing with blood diamond. It shows, for example, that controlling supply of arms can be as effective as discouraging the consumption of blood diamond.

Exchange Rate Assessment in a Resource-Dependent Economy: The Case of Botswana

The paper combines various methodologies to assessing the level of the exchange rate in Botswana, explicitly taking into account the implications of its dependency on diamond exports. Real exchange rate estimation indicates that, after a period of overvaluation, Botswana's real effective exchange rate is now broadly in line with economic fundamentals. The projected current account path is also consistent with external sustainability, defined to ensure sufficient savings of diamond wealth in order to maintain a stable import and consumption path through 2050. Sustaining consumption over the longer term will however require to address obstacles to non-diamond exports' competitiveness.

Exchange Rate Assessment in a Resource - Dependent Economy: The Case of Botswana

The paper combines various methodologies to assessing the level of the exchange rate in Botswana, explicitly taking into account the implications of its dependency on diamond exports. Real exchange rate estimation indicates that, after a period of overvaluation, Botswana's real effective exchange rate is now broadly in line with economic fundamentals. The projected current account path is also consistent with external sustainability, defined to ensure sufficient savings of diamond wealth in order to maintain a stable import and consumption path through 2050. Sustaining consumption over the longer term will however require to address obstacles to non-diamond exports' competitiveness.

Diamonds, foreign aid and the uncertain prospects for post-conflict reconstruction in Sierra Leone

This article examines the external and internal dimensions of post-conflict reconstruction in Sierra Leone. The United Nations, bilateral donors such as the UK, and transnational non-governmental organizations and aid agencies have been instrumental in providing much-needed external assistance to Sierra Leone during the latter stages of its civil war and in the immediate post-war period. Although foreign aid is a welcome source of external support for reconstruction efforts, it is finite like any other resource. Reconstruction must also address intangible issues such as corruption, as well as the healing of society through the Truth and Reconciliation Commission and the Special Court for Sierra Leone. Diamond exports hold potential as an internal source to spur economic growth and reconstruction. However, as the article illustrates, many obstacles remain, ranging from governance weaknesses in terms of capacity and domestic regulatory schemes on diamonds to the existence of illicit mining and smuggling of diamonds to regional instability.

Local responses to globalization and peripheralization in Luanda, Angola

This paper questions the likely benefits of globalization for Luanda by considering how global political and economic forces affect the lives of its 3.4 million inhabitants. Most live in informal, self-constructed settlements which lack basic infrastructure and services. Most receive little benefit from the nation’s oil and diamond exports, while many have had their livelihoods eroded by the collapse of the local economy and the contraction of the state. The paper also describes how the city has always been shaped by external forces - as a port serving the slave trade or colonial export agriculture - and what the role of external forces has been in creating and perpetuating the long-running civil war. International organizations have criticized the state for not creating basic conditions of development but in fact rarely provide funds to help it do so. The key globalization issue for Luanda (and Angola) is not how to ensure a more effective trickle-down of benefits from export-led growth, but how more people can be productively engaged in the development process. In relation to this, the paper describes the growing role of civil society within Luanda and how, with appropriate support, this can help achieve the broader development objective.

The Measurement of the Balance of Trade

THIS article is concerned with the methods of measuring what is called the Balance of Trade. Stated more accurately, though less concisely, the object in view is to consider how we can estimate to what extent during any given year, persons normally residing in the United Kingdom have on balance become indebted to persons normally residing elsewhere, or to what extent the latter have become indebted to us. I shall illustrate the discussion with figures relating to the year I9I3-the last normal year before the war. It is hardly possible to make a satisfactory analysis by the usual methods with regard to the war period, and the flow of statistical information is likely to be deficient for some time to come. We are, however, able to make a rough analysis of the position in I920, and I shall refer to this in the latter part of this article. The material upon which an analysis of the trade balance must necessarily be based is the official-returns of the value of imports and which cover nearly all the material goods which we buy from abroad, as well as nearly all those which we sell. The principal gap in the import figures seems to relate to diamonds, imports of which are known from the South African export returns to be understated to the extent of f12,ooo,ooo in I9I3. The export accounts are also incomplete in this respect, exports of diamonds in I9I3 being returned as nil. Another class of material goods not covered by the export statistics is second-hand ships, amounting in value to some millions of pounds. While the official accounts of imports and exports can be tinkered by making allowances for these points and others, it is scarcely worth while spending much time and labour on the process, because any modification made in the excess of imports shown in the returns will be small, and the margin to be allowed for error in estimating other items in the international account is inevitably large. These other items are the so-called exports, and the smaller, though not wholly negligible, invisible imports. Invisible exports and imports are so called not because they can in all cases be regarded as being in any sense exports or imports, but because they are items to be added to the exports and imports respectively when drawing up a full international trading account.