Guinea has vast mineral wealth, including one-third of the known
world reserves of bauxite, along with gold, diamonds, iron, timber,
graphite, and great potential in hydroelectric power. Starting in
1984, the Guinean government undertook an ambitious program to dismantle
the 26-year-old, centralized, state-run economy. The government
adopted a market economy and opened the country to trade and investment
from the outside world. These measures achieved significant progress
in downsizing the public sector and improving the regulatory environment.
The government has had less success, however, in liberalizing prices,
reforming the exchange-rate system, and increasing the efficiency
of the tax system. Moreover, Guinea’s preoccupation with security,
its inward focus, and its less-than-transparent judicial system
have discouraged many investors. Bauxite remains the government’s
primary source of revenue. Two proposed projects to expand the country’s
capacity to refine bauxite into alumina promise increased revenues.
Guinea’s collapsing infrastructure and the government’s
failure to upgrade electric and water utilities have dampened investor
interest...
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