Strong Democracy, Weak State

Through a comparative analysis of presidential tenures from Jerry Rawlings through John Mahama, this chapter notes that Ghana’s stable but modest growth reflects its long-term democratic stability and the need to retain voters’ support through expanding access to education and health. However, rapid growth through structural transformation has been hindered by weak state capacity and three political economy factors. First, robust democracy has enabled a broader range of interest groups to permeate policymaking decisions, often resulting in policy backtracking and volatility and fiscal deficits that stifle credit access for domestic business through high interest rates. Secondly, public sector reforms historically were not pursued to the same degree as macroeconomic reforms so, state bureaucrats lack the technical capacity to identify winning industries or to facilitate the transition to higher value-added sectors. Thirdly, successive governments have failed to invest in strong, productive relationships with the private sector. Consequently, achieving transformation in Ghana will require more activist economic policies within the confines of the state’s capacity.