Structural Change in Ghana 1960-2010

Type Working Paper
Title Structural Change in Ghana 1960-2010
Publication (Day/Month/Year) 2012
Development is associated with structural transformation, i.e. the decline of agriculture and the rise of manufacturing and services. Conversely, the lack of structural change can constrain development, as exemplified by Sub-Saharan Africa. This case study investigates the causes and consequences of the lack of structural change in Ghana over the period 1960-2010. Over fifty years after its independence, Ghana remains a poor and mainly agricultural economy, with limited industrialization and an unproductive service sector. First, we use sectoral data and the methodology of McMillan and Rodrik 2011 to estimate the contribution of structural change to productivity growth. We find that structural change was neither growth-enhancing nor growth-reducing and that changes in overall productivity were mostly explained by the performance of individual sectors. Second, we look at individual sectors and discuss why growth-enhancing structural
change did not occur in Ghana. Third, we refine the analysis by examining the respective roles of economic geography, informality and government policies in structural change. Lastly, we highlight the fact that Ghana has transitioned into a more efficient and more formalized economy in the last 20 years.

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