| dc.description.abstract | OWNERSHIP, REGULATION, OR BENEFITS? GHANA's EXPERIENCE WITH VALCO.
The thesis begins by observing that during the 1960s-1970s, a particular policy choice or strategy by which many governments of developing host country aspired to maximise or increase their benefits from operation s of tran snational corporation s (TNCs ) was to as sume some form of local ownership of the TNC subsidiaries. However, since the close of 1970s, these governments appear to have dropped local ownership strategy, especially in its expropri ation form. In stead, many of them have re sorte d to arrangements which are or inclu de regulatory measures. In dropping local ownership and choosing regulatory control, these governments are in effect opting for regulation-only policy. What is more, in some of the cases the regulatory measures are accepted or agreed to by the firms, producing an integrative arrangement. A case of such a policy change was demonstrated by Ghana in its 1982-85 renegotiations with Valco, an aluminium smelter owned by Kaiser Aluminium (90%) and Reynolds Metals (10%), two of the giant TNCs in the bauxite-aluminium industry. We examine Ghana's policy evolution toward Valco, showing Ghana demonstrated this pattern of policy change when it effectively dropped local ownership, choosing integrative regulationonly arrangement, during the renegotiations. Occurring in the first half of the 1980s, Ghana's policy choice took place during the transitional period of such a policy change, making it an interesting case for study. Why did Ghana choose integrative regulation-only arrangement ?
We review and examine the two major conventional interpretations of such a policy change in the literature. We show that by explaining such a policy change in terms of factors that affect the choice of local ownership, focusing largely on the firm-specific resources, the argument from obsolescence bargain model implies that these countries prefer local ownership. On the other hand, by explaining such a policy change in terms of factors which affect the use of regulatory control, focusing largely on location-specific resources, the arguments from regulatory optimism are assuming that these countries now prefer regulatory control.
In contrast to these conventional interpretations, we suggest and examine an interpretation which is es sentially a synthesis or integration of the two conventional interpretations . As suming that developing host countries' objective is to maximise their benefits from the relationship, we argue that policy choice is because of both the risks of local ownership, the risks of incurring relatively greater costs than benefits or relatively little increase in benefits, and improved chances of maximising benefits under integrative regulation-only arrangement.
In addressing our research-question, we develop a theoretical construct - from theory of E7DI and dependence theorv of bargaining - con stituting the strategic situation developing host countries are in. The mainstay of a party's benefits from the relationship is the value of the instrumental resources which it brings into the relationship. The value of resources which host country or TNC brings into the relationship is a function of the relative alternatives available to each of them. Under these relations, host governments policy choice toward the foreign firm is basically between two alternatives: an integrative outcome - that which the firm agrees to - because the firm's positions will not impose on the host country greater costs than host country's alternatives; and conflictual outcome - that which the firm does not agree to because the firm's positions will impose greater costs on host country than host country's alternatives. This throws up two analytical sub-questions in Ghana's policy choice toward Valco: (i) did there exist the risks of local ownership - both in integrative and conflictual forms - for Ghana when it dropped local ownership?, and (ii) why did Ghana not choose conflictual regulation arrangement when it resorted to regulation arrangement? To address these two questions, we generate separately conditions which affect attractiveness of local ownership and those which affect attractiveness of integrative regulation-only arrangement. After an examination and analysis of the conditions in the Ghana-Valco context, our findings demonstrate that there had develope d both the ri sks of loc al owners hip and improved chance s of significantly increasing local benefits under integrative regulation-only relationship.
In the final part of the study, we discuss both the theoretical and substantive implications of our findings. On one hand, our findings support the suggestion by the argument from obsolescence bargain model that policy change is because the conditions for use of local ownership had not improved; but, the substantive argument - pertaining to local ownership from obsolescence bargain model - ignores or does not address the prospects of significantly increasing local benefits under integrative regulation-only arrangement. For, on the other hand, our findings also lend support to the suggestions by arguments from regulatory optimism that policy change is because the developing host countries have developed or acquired the capability or conditions for effective use of regulatory instruments. But, here also, to have c onditi on s for u se of regul atory me as ure s improving doe s not nece s sarily sugge st there had developed risks of local ownership. In effect, our findings demonstrate that an integration of the empirical foundations of both conventional interpretations, under the rationalist assumption, make s a c omprehen sive and better expl anation than the argument of only one interpretation . As regards substantive implications, our findings show that though there does develop some form of competition over the loc ation- specific re source s in the (bauxite- aluminium) indu stry bringing about increase in the value of host countries' resources during the course of the relationship, TNC operations do not necessarily entail acquisition of key firm-specific resources by the host countries. | nor |