Specialization in Primary Products, Industrialization and Economic Development of Ghana

Abstract

This paper examines whether Ghana's continuing reliance on primary products has contributed to its economic growth and such economic growth would be sustained in the long run. It shows that Ghana's economic growth since the 1990s can be attributed to a series of fortunes and heavy reliance on a few primary products will not lead to a sustainable development. The experience of Ghana provides important policy implications. Structural reforms, such as a well-designed industrial policy, would be needed for the long run economic development. For Ghana, industrialization did not progress since the 1980s. The infrastructure could not support the manufacturing development and the tertiary level education is not appropriate, particularly in science and engineering. Focusing on selected industrial estates would be meaningful in light of the limited resources. It is needed to prepare a stable supply of electricity and to reduce an exchange rate volatility. A modification of tariff structure depending on the stages of processing and an active utilization of export incentive schemes would be helpful. The government is to pay attention to a further development of the agro-processing industry, textiles and garments industry, aluminum production and the petrochemical industry.