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Über dieses Buch

The book follows a first edition published in 1989, which focused on the severe economic crisis Ghana faced during the late 1970s and the early 1980s. In this second edition, the authors extend the review up to the mid-2010s, covering the entire period since independence, with a special focus on shifts in economic policy, starting with the adoption of the Economic Recovery Programme in 1983. Huq and Tribe provide systematic coverage of Ghanaian economic development since its independence, reviewing the two main modes of development that have been practiced; and offer an updated, rich data bank. By analyzing the wider macroeconomy of Ghana; its individual sectors; money, banking and trade; infrastructure and environmental policies; and Ghana’s poverty, welfare and income distribution, the authors are able to draw vital lessons from the country’s economic development. ​

Inhaltsverzeichnis

Frontmatter

Overview

Frontmatter

1. A General Overview

Abstract
This book aims to make a further contribution to our study of the development of the economy of Ghana. The earlier volume—The Economy of Ghana: The First 25 Years Since Independence (Huq, 1989)—examined the economic progress of the country since independence in 1957 up to the early 1980s. This volume takes forward the story to the present, thus enabling us to cover a period of over five decades.
Mozammel Huq, Michael Tribe

2. Policies and Reforms: A Historical Overview

Abstract
Over the last several decades of Ghana’s economic development, as considered in this study, two distinctly different economic strategies have been pursued by the government of the country. There existed some form of economic planning even before Ghana’s independence in 1957 and, over the years, government controls in resource allocation became marked, particularly so during the late 1970s and early 1980s. But, with the Economic Recovery Programme (ERP), initiated in 1983, a diametrically opposite policy regime was instituted. With the ERP, there began implementation of Structural Adjustment Programmes (SAPs) under close supervision by the IMF and the World Bank.
Mozammel Huq, Michael Tribe

The Wider Macroeconomy

Frontmatter

3. Growth and Structure of the Economy

Abstract
The foundations of the present structure of the Ghanaian economy were laid between 1890 and 1910. This 20-year period witnessed an annual average growth of 1.8 per cent in GDP per capita according to estimated national income accounts for that period. Judged by the economic performance of developing countries at that time, such a growth rate was high and marked a significant improvement in living standards. As observed by Omaboe (1966, p. 18):
This was the period during which the export economy of the forest belt of the country was developed and transformed. Prior to this the country had a small export trade but this was based largely upon the collection of naturally-occurring forest produce such as palm fruits and kernels, kola nuts and wild rubber. These two decades saw the replacement of this export trade by the product of two major economic activities, gold-mining and cocoa-farming. They have dominated the economy of the country for more than half a century now and they have dictated the pace of economic growth and the present structure of the economy.
Mozammel Huq, Michael Tribe

4. Achieving Macroeconomic Stability

Abstract
Following the preceding two chapters which focussed on economic policy and reform and on the growth and structure of the economy, this chapter considers core macroeconomic issues in the Ghanaian economy, with particular attention to the period after April 1983 when the first Economic Recovery Programme (ERP) was launched. This period has seen a remarkable recovery of the economy and the establishment of what appears to be sustained economic growth at levels historically high (for both Ghana and sub-Saharan Africa).
Mozammel Huq, Michael Tribe

Sectoral Developments

Frontmatter

5. Agriculture

Abstract
Agriculture was the largest sector of the Ghanaian economy until it was surpassed by the services sector in 1987. Then, in 2011, it moved to the third position—this time surpassed by the industry sector, and the decline of the relative share of agriculture in GDP has continued (Table B.6). At constant 2006 prices, the contribution of agriculture to GDP went down from 40.77 per cent in 1965 to 32.03 per cent in 1990, and further to 29.06 per cent in 2000, 26.77 per cent in 2010 and 21.66 per cent in 2015 (Tables 3.​4 and B.6). However, in terms of employment, even as recently as 2010, agriculture was maintaining a strong position, employing 42 per cent of the total labour force which was slightly lower than that of the services sector (where the corresponding figure was 43 per cent), but much higher than that of the industry sector (15 per cent). This dominance is particularly sharp in the rural economy, where an estimated 46 per cent of the people of the country live. Also, in the rural areas, the share of agricultural employment is significantly higher, 76.1 per cent (MoFA, 2013, p. 8).
Mozammel Huq, Michael Tribe

6. Cocoa

Abstract
The importance of Cocoa to Ghana’s economy can hardly be overstated. In terms of the land area cultivated, as much as 1.45 million hectares (about 50 per cent of the total cultivated land area) was under cocoa production in 1970. Following the economic crisis of the late 1970s and the early 1980s and, in particular, the collapse of the export sector that followed, the share of cocoa in Ghana’s agricultural sector significantly declined, but has somehow revived during the recent decades, now occupying some 10% of the share of the total agricultural output. However, in terms of employment, the livelihoods of over 800,000 smallholder households are supported by this sector (Anim-Kwapong & Frimpong, 2004), and many others are engaged in trade, transportation and the processing of cocoa.
Mozammel Huq, Michael Tribe

7. Industry: A Broad Overview

Abstract
The term ‘industry’ has a number of different meanings, not least when contrasting colloquial or conversational meanings with more precise economic definitions within national income accounting conventions. The ‘industrial sector’ in national income accounting terms, according to the United Nations International Standard Industrial Classification (ISIC), refers to manufacturing, mining and quarrying, construction, electricity, gas and water supply (including waste management) (UN, 2008, pp. 275–276, Table 4.2). However, within discussion of ‘industrialisation’ the meaning often tends to be restricted only to the manufacturing sector.
Mozammel Huq, Michael Tribe

8. Mining

Abstract
Along with cocoa and timber, minerals account for the largest share of Ghana’s exports (see Chap. 12). Ghana’s major mineral exports were gold, diamond, manganese and bauxite for a long time until the recent emergence of oil as an important mineral export. Other important minerals which have potential for the future are iron ore, industrial clays (ball clay, kaolin, feldspar, silica sand), mica, refractories and some abrasive minerals. Some of these, including limestone and lime, lead, ball clay, kaolin and feldspar, are currently mined only on a small scale.
Mozammel Huq, Michael Tribe

9. Manufacturing

Abstract
The Ghanaian manufacturing has been the subject of a significant number of research-based publications using a limited dataset. In referring to a ‘limited’ dataset the meaning is paucity of data. The most recent consistent series of value-added data, published regularly in the GSS Quarterly Digest of Statistics until the demise of that publication in 2000, ends in 2003 (GSS, n.d.-a; UNIDO, 2017). Data from the World Bank’s ‘Regional Project on Enterprise Development’ (CSAE, 2017), which have been used in detailed economic analysis, are also available for a period ending in 2003.
Mozammel Huq, Michael Tribe

10. The Services Sector

Abstract
For several decades the world has been witnessing a major structural change in economies with the services sector expanding rapidly as a proportion of both GDP and employment. This change can be observed in virtually all countries, both developed and developing, although the change is particularly marked for developed countries. This raises the question of what precisely the services sector consists of and what role it has in the economy and in economic growth and development.
Mozammel Huq, Michael Tribe

Money & Banking, External Trade and Financial Flows

11. Banking and Finance

Abstract
Money and credit have many functions in an economy, but from the point of view of economic development, their role in financing agriculture, industry, commerce and other activities is vital. Working as intermediaries, the banking and finance institutions play a major role in raising savings and investment and this role is, obviously, of great importance in developing countries, where both these functions need to be strengthened for faster economic growth.
Mozammel Huq, Michael Tribe

12. International Trade

Abstract
This chapter and the next provide an overview of Ghana’s place in the evolving international economy focussing particularly on the period since the mid-1980s, but giving some additional data for earlier years which supplement that in the 1989 edition of this book. The adoption of the Economic Recovery Programme in 1983, and the series of economic policy adjustments which occurred in the following years, changed Ghana’s relationship with the global economy radically. Many aspects of the economic policy regime which existed prior to 1983 made Ghana’s economy unsustainable in the absence of significant changes. Some of the data presented in this chapter relates to the earlier period, and more detailed discussion of this earlier period is to be found in Huq (1989, chapters 10 and 11). It can be noted that Oduro (2000) reviews Ghana’s external trade experience between 1970 and 1996 in an illuminating review.
Mozammel Huq, Michael Tribe

13. External Financial Flows and Debt Relief

Abstract
Apart from items associated with debt and debt relief, the main categories of international financial flows consist of official development assistance (ODA), official development finance (ODF—i.e. not on concessional terms), foreign direct investment (FDI) and remittances (particularly personal remittances).
Mozammel Huq, Michael Tribe

Infrastructure, Environment and Governance

Frontmatter

14. Transport and Communications

Abstract
The development of infrastructural facilities in the form of transport and communications systems, energy, water supply, health and education is a necessary precondition for investment in directly productive activities such as agriculture and manufacturing. The importance of social and economic overhead capital was emphasised by Adam Smith, who argued that it was the duty of the state to erect and maintain those public institutions and those public works which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature, that the profit could never repay the expense to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain (Smith, 1976 and 1950, p. 244).
Mozammel Huq, Michael Tribe

15. Energy and Water

Abstract
This chapter will focus particularly on the energy and water sub-sectors in the industrial sector of the economy. The discussion will not delve deeply into the economic characteristics and performance of the sub-sectors due to limitations of space, but it will aim to review their development over the last few decades. In the sections dealing with the energy sub-sector the focus will mainly be on woodfuel/charcoal and electricity which means that oil/gas will be excluded except in the introductory overview. It is clear that oil/gas developments are of the utmost importance to the Ghana economy, but the issues involved are so complex that it was decided to omit detailed consideration. Some aspects of the oil/gas industry are included in Chap. 8 dealing with mining and the minerals sub-sector, and others are included in Chap. 12 covering international trade. There will be some overlap with matters which are also dealt with in the chapter covering environment (Chap. 17) but this will be kept to a minimum. There is an appendix to this chapter which provides some historical background to the Akosombo hydroelectric project and its links to bauxite and alumina mining and processing operations.
Mozammel Huq, Michael Tribe

16. Education and Health

Abstract
As in transport and communications and also in energy and water (covered in the last two chapters), externalities are often associated with investment in education and health. Hence the need for the state getting directly involved in investment here and/or providing directions for achieving efficiency in resource allocation which may necessitate the estimation of the social rate of return. Besides, in the context of modern theories based on the ‘endogenous growth’ approach the improvement of the quality and skill structure of the labour force and of the health and well-being of the population are both targets in themselves but are also the means towards the development of a stronger economy and of higher productivity levels.
Mozammel Huq, Michael Tribe

17. The Environment

Abstract
The environment is an extremely wide subject area, including everything from air quality to global warming. For a country such as Ghana, which can still be categorised as a developing economy, the priority environmental issues are likely to be somewhat different to those of developed industrial countries and, therefore, policy priorities, dimensions and instruments are also likely to differ. Ghana is a country which has the equator at its southern coast on the Gulf of Guinea and the Sahel at its northern border with Burkina Faso. The climatic and ecological profile ranges from hot and humid at the coast to hot and dry in the north. It should be noted that a contemporary publication has provided a valuable discussion of the environmental dimensions of Ghana’s development (Twerefou & Tutu, 2017) and this chapter aims to complement it. This chapter overlaps quite considerably with the subject matter of other parts of this book, and this will be limited as far as is possible. For example, Chap. 14 dealing with energy and water includes important environmental matters including resource depletion, energy efficiency and the health implications of water and sanitation systems.
Mozammel Huq, Michael Tribe

18. Governance

Abstract
The significant decline of the Ghanaian economy between the mid-1970s and the mid-1980s, charted in detail in earlier chapters of this book (see Chaps. 3 and 4 in particular), is widely regarded as being due to the high degree of economic mismanagement which occurred during this period (Aryeetey & Fenny, 2017, pp. 46–52). This is not to say that economic management was of a high standard before the mid-1970s. There had been significant problems earlier, not least due to the difficulty in maintaining control of ministerial commitments to external borrowing with its associated indebtedness and debt service obligations (Cohen & Tribe, 1972). One of the key elements of the economic mismanagement in the 1970s and early 1980s was the inflexible, and rarely changed, official foreign exchange rate. For example, the 44 per cent devaluation introduced by the Busia government in late 1971 is usually regarded as being the ‘last straw’ which led to the overthrow of the government and the installation of the military government of Colonel Acheampong in January 1972 (Herbst, 1993, pp. 23 and 41). One of the first actions of the military government which took over from Busia was to revalue the Ghanaian cedi virtually negating the devaluation. Later in the decade the government of General Akuffo devalued the cedi (from ₵1.15 to US$1.00 to ₵2.75 to US$1.00) in 1978, but by early 1983 some estimates of the appropriate ‘shadow’ exchange rate suggested an overvaluation of the official exchange rate by about 1000 per cent (or by a factor of 10). The black-market exchange rate was about ₵70 to 80.00 to US$1.00 by this time, or about 27 times the official rate (Huq, 1989, p. 196; Chap. 12, Sect. 12.6 in this volume).
Mozammel Huq, Michael Tribe

Poverty and Income Distribution

Frontmatter

19. Poverty and Inequality

Abstract
While issues of resource allocation are important as regards to economic growth, how income is distributed among the people is also a matter of concern. In particular, following the period of the Millennium Development Goals (MDGs) which ended in 2015, the UN has now adopted a new set of agenda called the “Sustainable Development Goals (SDGs)” to be achieved during the years 2015–2030, specifically aiming to end poverty, protect the planet and ensure prosperity for all as part of a new development initiative. Each of the 17 goals adopted identifies a specific target to be achieved over the next 15 years. While the UN expects everyone including governments, the private sector and civil society to play their part in achieving these goals, there is a particular pressure on the governments of developing countries, especially those with high levels of poverty, to deal seriously with the issues of poverty and income distribution.
Mozammel Huq, Michael Tribe

20. State Role in Welfare

Abstract
As shown in the previous chapter, following the SDG agenda, the elimination of poverty by 2030 is now an internationally recognised target. Like many other developing countries, Ghana hopes to achieve the target even before 2030.
Mozammel Huq, Michael Tribe

Looking Ahead

Frontmatter

21. The Way Forward

Abstract
From the time of its independence in 1957, Ghana’s economic development has attracted serious attention from many economic researchers. The most prominent of these was probably the Nobel Laureate Arthur Lewis. In 1953, Lewis prepared for the British Colonial Office a very influential ‘template’ for industrialisation policy in sub-Saharan Africa. This document was also published by the colonial government of what was then the Gold Coast (Lewis, 1953). In 1957 Lewis was appointed economic advisor to the newly independent government of Ghana. As a strong proponent of sound and rapid economic development, Lewis’s imprint was to be found on many, but not all, economic policies; he was closely involved in the preparation of the Five-Year Development Plan 1959–1964 (Government of Ghana, 1959).
Mozammel Huq, Michael Tribe

Backmatter

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