Exploring the Multidimensional Determinants of Local Economic Development in Rural Communities in Ghana: A Comparative Analysis

Abstract

Local economic development (LED) in rural communities is a vital aspect of achieving balanced national growth and enhancing the well-being of rural households. However, rural areas face unique challenges that necessitate a focused understanding of the determinants influencing their economic development. This paper aims to examine the determinants that influence LED in rural communities, comparing their importance and impact across different rural areas, understanding the interrelationships among these determinants, and providing evidence-based recommendations for policymakers and community leaders. Drawing on a comprehensive analysis of survey data with a sample size of 911, this study investigates a diverse set of eight rural communities selected from four regions and four districts in Ghana. Quantitative data was collected to analyse demographic factors, economic indicators, and infrastructure characteristics of each community. Regression models, namely ordered logistic regression and ordered probit regression and factor analysis was employed to identify significant determinants and their interrelationships. The findings highlighted that the key determinants of LED in rural communities are economic capital, human capital, social and governance capital, cultural capital, infrastructure, and environmental capital. These identified key determinants were integrated as a framework for policymakers and community leaders to prioritize and design targeted interventions and policies that address the unique needs and challenges of rural areas. The findings highlight the significance of investing in human capital, economic resources, social and governance structures, cultural assets, infrastructure, and environmental sustainability to promote inclusive and sustainable economic growth. Hence, the study contributes to the academic literature on rural economics and serve as a foundation for further research in the field. By investigating the multidimensional determinants that influence LED in rural communities, this study aims to provide valuable insights and recommendations for fostering employment creation, poverty reduction, sustainable development, reducing disparities, and enhancing the overall well-being of communities in rural areas.