Photo Credit: Idobi
In high school, I remember my friend mentioning foreign investors in a cautious tone. Because of him, I’ve learned to view them in the same light. But let’s qualify that.
Foreign investment has benefited many nations with a scarcity of natural resources. So of course, those investments would not be in the primary sector, but the secondary or even tertiary sectors.
Investments in the primary sector are what we have to be careful of. I don’t believe that foreign investors in the primary sector have evil intentions. But when the people of the country are unfairly limited in using their own natural resources for their own economic well-being, there’s definitely going to be some problems.
Let’s take Cuba for example:
The growth of American sugar estates was so quick that in 1905 nearly 10% of Cuba’s total land area belonged to American citizens. By 1902, American companies controlled 80% of Cuba’s ore exports and owned most of the sugar and cigarette factories.
Hence the huge sign above.
Another glaring example would be Iran’s petroleum industry:
“Grievances included the small fraction of revenues Iran received. In 1947, for example, AIOC reported after-tax profits of £40 million ($112 million) – and the contractual agreement entitled Iran to just £7 million or 17.5% of profits from Iranian oil. In addition, conditions for Iranian oil workers and their families were very bad. The director of Iran’s Petroleum Institute wrote that:
Wages were 50 cents a day. There was no vacation pay, no sick leave, no disability compensation. The workers lived in a shanty town called Kaghazabad, or Paper City, without running water or electricity, … In winter the earth flooded and became a flat, perspiring lake. The mud in town was knee-deep, and … when the rains subsided, clouds of nipping, small-winged flies rose from the stagnant water to fill the nostrils …. Summer was worse. … The heat was torrid … sticky and unrelenting – while the wind and sandstorms shipped off the desert hot as a blower. The dwellings of Kaghazabad, cobbled from rusted oil drums hammered flat, turned into sweltering ovens. … In every crevice hung the foul, sulfurous stench of burning oil …. in Kaghazad there was nothing – not a tea shop, not a bath, not a single tree. The tiled reflecting pool and shaded central square that were part of every Iranian town, … were missing here. The unpaved alleyways were emporiums for rats.”
Investors are not primarily concerned with the economic welfare of the people whose country they are extracting resources from, but that’s the reality. What we can do from now on is to always protect national interests. And that includes eventually focusing on the secondary sector.
Photo Credit: Axe
The country’s gross domestic product (GDP) grew twelvefold between 1960 and 1978, from 145 to 1,750 billion CFA francs, while the trade balance continued to record a surplus.
The origin of this economic success stemmed from the president’s decision to focus on the primary sector of the economy, rather than the secondary sector.
“The economic system developed in cooperation with France was far from perfect. As Houphouët-Boigny described it, the economy of Côte d’Ivoire experienced “growth without development”. The growth of the economy depended on capital, initiatives and a financial framework from investors abroad; it had not become independent or self-sustaining.”
Since Ivory Coast has focused on the primary sector already, isn’t it time for the secondary sector?
If there’s no corruption, and if the quality of education improves, maybe we can achieve what South Korea, Taiwan, and Singapore have done as well.
Photo Credit: William Cho