Ghana S Economic And Agricultural Transformation

Using Ghana as a case study, this work integrates economic and political analysis to explore the challenges and opportunities of Africa's growth and transformation.

Many African countries have experienced unprecedented rates of economic growth in recent years, yet their economic transformations display features that could constrain their future growth prospects. Particularly troublesome have been patterns of urbanization without industrialization, rapid growth of low-productivity jobs in the informal economy, and a neglected agricultural sector with increased need for imported foods. Using Ghana as a case study, this book explores the challenges and opportunities of these patterns of transformation. By combining a historical and political perspective with in-depth empirical analysis of the performance of the broader economy and the agricultural sector since the economic reforms of the 1980s, the book considers viable policy options for Ghana and discusses the implications for other African countries.

Using Ghana as a case study, this work integrates economic and political analysis to explore the challenges and opportunities of Africa's growth and transformation.

Ghana experienced rapid economic growth with an annual GDP growth rate of 6.6 percent between 2009 and 2019 (GSS 2023). Restrictive COVID-19 policy measures in 2020 caused a slowdown in growth (Amewu et al. 2020), with the rate falling to just 0.5 percent in that year (World Bank 2023a). Economic growth rebounded to 5.4 percent in 2021, but this growth was fueled by excessive government borrowing to finance an ambitious public infrastructure campaign and ushered in a severe financial crisis in Ghana. By 2022, the fiscal deficit had reached almost 10 percent of GDP and the total debt-to-GDP ratio had skyrocketed to 90 percent, resulting in rampant inflation (32 percent year-on year), a doubling of interest rates (from 14 to 28 percent), and a sharp currency depreciation (40 percent) (World Bank 2023b; Naadi 2023). Economic growth slowed to 3.2 percent in 2022 and is projected to decline further to 1.6 percent in 2023 (World Bank 2023a). Although President Akuffo-Addo blamed “malevolent forces” (Financial Times 2023)—including the global commodity market shock caused by Russia’s invasion of Ukraine, which by some accounts had only a minimal effect on Ghana’s economy (Arndt et al. 2023; Diao and Thurlow 2023)—the economic situation eventually forced the government to agree to an IMF bailout of US$3 billion in 2023. This will be in force for three years.

Several Sub-Saharan African nations have experienced increased economic growth and political stability in recent years compared with the stagnation and turmoil of previous decades. Ghana is one of the biggest success stories of the region; the nation has enjoyed an annual average of five percent economic growth for the past 20 years and will probably be the first Sub-Saharan African country to achieve the Millennium Development Goal of cutting poverty in half by 2015.This study examines how Ghana can build on its achievements and possibly serve as a model for other African countries. By drawing on existing literature and applying a highly disaggregated dynamic general equilibrium model to Ghana's experiences, the authors identify certain necessary factors for further economic development in the country. These requirements include continued political stability, growth in manufacturing, improved domestic services such as transportation, and agricultural development that goes beyond past reliance on cash crops such as cocoa to include major staples and livestock. This kind of broad-based growth will benefit the entire economy, thereby reducing poverty. The authors' analysis provides an economic development strategy for Ghana, and possibly other countries in the region, to policymakers, development specialists, and others concerned with Sub-Saharan Africa.