MODELING THE DEVELOPMENT TRAJECTORY OF MADAGASCAR’S MINING INDUSTRY SECTOR FOR ENHANCED ECONOMIC GROWTH AND POVERTY REDUCTION

MINING INDUSTRY SECTOR GOVERNANCE

This study analyzes the conditions that enable the mining sector in Madagascar to effectively contribute to economic growth and poverty reduction. Although foreign direct investment (FDI) has increased significantly in recent years, its impact on living conditions remains limited, in a country where multidimensional poverty remains structurally entrenched. This paradox calls into question the real capacity of this sector to generate inclusive benefits. Using a Structural Equation Modeling (SEM) approach, the research examines three interdependent levers: FDI attractiveness, the Local Content Policy (LCP), and Mining Revenue Governance (MRG). The survey, conducted among 324 stakeholders from four mining regions and the national level, empirically validates four main hypotheses. First, the attractiveness of FDI in the mining sector is determined by institutional (governance, tax framework) and structural (infrastructure, geological potential) factors. Second, the LCP promotes the integration of local businesses, job creation, and territorial economic anchoring. Third, a GREX based on transparency, accountability, and citizen participation stimulates structural transformation and economic diversification. Finally, the study establishes that the effect of FDI on poverty reduction is entirely mediated by the quality of the LCP and GREX. The joint activation of these three levers would increase FDI flows as a share of GDP by 1.945%, while reducing the poverty rate by 1.231%. The regression coefficients are significant (β = 0.26 to 0.81) and the adjustment indices are excellent (CFI ≥ 0.93; RMSEA ≤ 0.057). This work proposes a robust integrated model, adapted to the Malagasy context and demonstrates that only a strategic articulation between FDI, local content and revenue governance can sustainably transform the mining industry sector into a lever for inclusive growth and tangible poverty reduction.

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