Ghana's Economic and Agricultural Transformation
OUP CORRECTED PROOF – FINAL, 30/7/2019, SPi 3 Strong Democracy, Weak State The Political Economy of Ghana’s Stalled Structural Transformation Danielle Resnick 3.1 Introduction What are the political and institutional factors that enable governments to pursue policies to promote economic and agricultural transformation? Sus- taining growth, achieving inclusive development, and promoting structural transformation require qualitatively different, albeit not necessarily mutually distinct, economic policy interventions. In particular, respecting property rights, investing in broad-based public goods, such as infrastructure, education, and health, and adhering to macroeconomic stability, can be critical “funda- mentals” for, or enablers of, sustainable growth, but they do not necessarily result in structural transformation (see Chapter 2 of this book, and Rodrik 2014). Instead, the latter may be more likely when specific industries are favored, firms are incentivized, and market failures within and across sectors are over- come (see Sen 2015). Hausmann et al. (2008) identify three different types of market failures that need to be overcome in order to achieve transformation: self-discovery externalities (identifying new products that can be produced profitably), coordination externalities (engaging in simultaneous investments upstream and downstream), and missing public inputs (legislation, accredit- ation, and infrastructure). Structural transformation therefore requires more activist government policies beyond providing an enabling environment. However, some of the economic policy levers that are available for address- ing these market failures may be more viable in certain political and institu- tional settings than others. By investing in the economic “fundamentals,” peaceful, democratic societies are typically better at sustaining growth than conflict-ridden, autocratic ones (e.g., Acemoglu and Robinson 2012; Feng 1997; Gerring et al.
[Show full text]