Ghana’s Economy-wide Transformation

This chapter relies on a conceptual framework development by Dani Rodrik (2014, 2018) that identifies three sources of growth: accumulation of fundamental capabilities (e.g., better institutions, enabling policies, and healthy, educated workers), catching-up growth through expansion of modern manufacturing, and structural change due to the movement of workers from low- to high-productivity sectors. The chapter argues that Ghana has invested in fundamentals rather than in transformative policies, resulting in slow but persistently stable growth and limited industrialization. This is illustrated through a rigorous analysis of sector-wise relative labor productivity and employment shares from 1984–2011. The chapter concludes by claiming that accelerating, and even just sustaining the country’s average annual GDP/capita growth rate of 2.8 percent, requires modernizing larger shares of the agricultural, manufacturing, and services sectors. Growing national demand offers new market opportunities in these sectors as do opportunities for increased exports into the West African regional market.