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Ghana's Economic and Agricultural Transformation: Past Performance and Future Prospects

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Ghana's Economic and Agricultural Transformation: Past Performance and Future Prospects A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Diao, Xinshen (Ed.); Hazell, Peter B. R. (Ed.); Kolavalli, Shashidhara L. (Ed.); Resnick, Danielle (Ed.) Book — Published Version Ghana's economic and agricultural transformation: Past performance and future prospects Provided in Cooperation with: Oxford University Press (OUP) Suggested Citation: Diao, Xinshen (Ed.); Hazell, Peter B. R. (Ed.); Kolavalli, Shashidhara L. (Ed.); Resnick, Danielle (Ed.) (2019) : Ghana's economic and agricultural transformation: Past performance and future prospects, ISBN 978-0-19-884534-8, Oxford University Press, Oxford, http://dx.doi.org/10.1093/oso/9780198845348.001.0001 This Version is available at: http://hdl.handle.net/10419/206776 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc/4.0/ www.econstor.eu OUP CORRECTED PROOF – FINAL, 30/7/2019, SPi Ghana’s Economic and Agricultural Transformation OUP CORRECTED PROOF – FINAL, 30/7/2019, SPi OUP CORRECTED PROOF – FINAL, 30/7/2019, SPi Ghana’s Economic and Agricultural Transformation Past Performance and Future Prospects Edited by XINSHEN DIAO, PETER HAZELL, SHASHIDHARA KOLAVALLI, AND DANIELLE RESNICK 1 OUP CORRECTED PROOF – FINAL, 30/7/2019, SPi 3 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © International Food Policy Research Institute (IFPRI) 2019 The moral rights of the authors have been asserted First Edition published in 2019 Impression: 1 Some rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, for commercial purposes, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. This is an open access publication, available online and distributed under the terms of a Creative Commons Attribution – Non Commercial 4.0 International licence (CC BY-NC 4.0), a copy of which is available at http://creativecommons.org/licenses/by-nc/4.0/. Enquiries concerning reproduction outside the scope of this licence should be sent to the Rights Department, Oxford University Press, at the address above Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2019938558 ISBN 978–0–19–884534–8 Printed and bound in Great Britain by Clays Ltd, Elcograf S.p.A. Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work. Any opinions stated in the book are those of the author(s) and are not necessarily representative of or endorsed by IFPRI. OUP CORRECTED PROOF – FINAL, 30/7/2019, SPi Preface Economic growth accelerated across much of sub-Saharan African (hereinafter called Africa) in recent years, and although outpaced by Asia, the rates of growth achieved were nevertheless unprecedented for many countries. This led to a period of euphoria among many experts who believed African economies seemed finally to be taking off. Some African countries were even characterized as African “lions”, counterparts to the so-called Asian “tigers”. However, unlike the economic transformations of the Asian tigers, rapid urbanization and the movement of workers out of agriculture has not been accompanied by any significant growth in industry or export manufacturing, nor has there been an agricultural green revolution. Rather, workers have moved primarily into a burgeoning but low-productivity service sector, and agriculture has remained largely traditional with only modest growth in land productivity. There are growing concerns that this pattern of transformation may be unsustainable, and at best can lead to only moderate rates of economic growth. This book explores these issues using Ghana as a case study. Ghana is unusual by African standards in that it is blessed with minerals, favorable agricultural conditions, and easy access to international shipping. The country has also been successful in terms of growth in per capita income (PCI) and agricultural output, reductions in poverty, and the achievement of middle- income status and a broadly democratic and peaceful society. Per capita incomes have grown consistently since the mid-1980s, but at 2.8 percent per year on average its growth has been less than half of what China and some other East Asian tigers experienced at similar stages of their economic trans- formation and offers only a slow path to greater prosperity. And despite all of Ghana’s latent advantages, the structural changes in the national economy have been typical of much of Africa, with rapid urbanization without a growing industrial sector, and a rapidly growing services sector. This book aims to explain why Ghana has not transformed its economy more substantially, why its agriculture sector—beyond cocoa—has not played a greater role and explores options for the country’s future transformation. Answering these puzzles and looking prospectively requires both political and economic analysis to ensure that potential technical options are also politically feasible. OUP CORRECTED PROOF – FINAL, 30/7/2019, SPi vi The Ghana experience shows that while enabling policies appear necessary for achieving and sustaining rapid economic growth, they are not sufficient. As late developers, African countries face limited opportunities for export manu- facturing so must depend more on their domestic and regional markets to absorb increases in output. Since demand in these markets is generally less elastic than in world markets, sector growth rates are constrained by growth in demand, which in turn depend on growth in national income and its distri- bution. This calls for a more balanced growth strategy than was the case in the tiger economies, with broad support for productivity growth within all sectors, freeing up regional trade within Africa, and overcoming many market and institutional failures that constrain private sector development and the effect- iveness of market solutions. Governments need to play more proactive roles in promoting and guiding their economic transformations, much as happened in the Asian tigers. However, the ability of governments to play more proactive roles is constrained by their political and institutional contexts. With very few exceptions, African government policies towards agriculture over recent decades have ranged from half-hearted to detrimental, despite enormous opportunities to grow the sector through productivity-enhancing technologies. Ghana, for example, spends very little on agricultural develop- ment beyond its cocoa sector, and changing this political dynamic is not easy, complicated by the varying agendas and off budget projects of both successive executives and different donors that undermine a more coherent strategy. Even where political factors are more enabling, public sector capabilities to take more proactive approaches are limiting, the result of years of institutional neglect by governments and donors. For example, Ghana’s few attempts to partner with the private sector to fix market failures along important value chains for some promising manufacturing and agriculture commodities have not been particularly successful. In the end, whether countries like Ghana can sustain or even increase their past rates of economic growth will come down to government effectiveness in finding solutions to the bottlenecks in key segments of the industrial and agricultural sectors. It will also require government willingness to engage more widely with the private sector, and the development of innovative institutional arrangements for moving the agenda forward despite remaining weak public sector capacities and market failures. OUP CORRECTED PROOF – FINAL, 30/7/2019, SPi Acknowledgments This book draws on the extensive work undertaken by IFPRI’s Ghana Strategy Support Program (GSSP) since 2005. The idea of a book emerged from a conference
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