Resource Abundance and Economic Development

By R. M. Auty | Go to book overview

10 A Growth Collapse with Diffuse Resources: Ghana

ROBERT OSEI


10.1 INITIAL CONDITIONS

Ghana is endowed with a broad range of natural resources, including arable land, forests, sizable deposits of gold and diamonds and a considerable potential for hydroelectric power. This study classifies Ghana as a small resource-abundant country. Its per capita cropland in 1970 was around 0.34 hectares, a figure below the average for resource-abundant countries (Table 10.1), but when it is combined with minerals, forests, and hydro, the status of Ghana as a resource-abundant country on the eve of the oil shocks is confirmed. In addition, Ghana's absolute GDP of US$2.2 billion at that time was above the average of the small resource-rich countries, an advantage for industrialization. Ghana also derived potential benefits for economic development from the fact that its dominant export crop cocoa, generates diffuse socioeconomic linkages.

Other initial conditions were also propitious. Like Malaysia, Ghana achieved independence from Britain in 1957 with institutions that included the rule of law, democracy, an effective civil service and a level of education that was high relative to those of its regional peer group. Ghana was also one of the wealthiest countries in sub-Saharan Africa with a per capita income close to that of Malaysia and South Korea. Finally, the economy was open and relatively undistorted, although economic growth during the 1950s, at around 4 per cent per annum, barely kept pace with population growth. Killick (1999 : 54) writing on the immediate post-independence period notes; 'In terms of average incomes, absence of a balance of payments constraint, a sound budgetary situation and a well-functioning public administration, Ghana compared well with many other of the nations starting on the road of economic modernization and development'. Ghana was the first black African state to receive independence and it was seen by many as a pilot case for Africa's readiness for independence.

Ghana may well have possessed more favourable preconditions for competitive industrialization than Malaysia, but its development trajectory conformed to the staple trap model of resource-abundant countries during the first twenty-five years

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Resource Abundance and Economic Development
Table of contents

Table of contents

  • Unu World Institute for Development Economics Research (Unu/Wider) ii
  • Resource Abundance and Economic Development iii
  • Foreword v
  • Acknowledgements vii
  • Contents ix
  • List of Tables xi
  • List of Figures xiv
  • List of Contributors xv
  • Part I Introduction 2
  • 1: Introduction and Overview 3
  • References 15
  • Part II Critical Parameters in Resource-Based Development Models 18
  • 3: The Sustainability of Extractive Economies 36
  • Appendix 3.1 Deriving Net Income and Genuine Saving 46
  • References 55
  • References 73
  • Part III Long-Term Perspective On, and Models Of, Resource-Based Growth 94
  • References 109
  • 7: Short-Run Models of Contrasting Natural Resource Endowments 113
  • References 124
  • References 142
  • Part IV Development Trajectories of Resource-Abundant Countries 145
  • 9: Competitive Industrialization with Natural Resource Abundance 147
  • References 163
  • 10: A Growth Collapse with Diffuse Resources 165
  • References 177
  • References 191
  • 12: A Growth Collapse with High Rent Point Resources 193
  • References 206
  • 13: Large Resource-Abundant Countries Squander Their Size Advantage 208
  • References 220
  • Part V Lessons for Policy Reform 223
  • References 237
  • 15: Growth, Capital Accumulation, and Economic Reform in South Africa 239
  • Appendix 15.1 257
  • References 258
  • 16: Reforming Resource-Abundant Transition Economies 260
  • References 275
  • References 294
  • 18: A Nordic Perspective on Natural Resource Abundance 296
  • Part VI Conclusions 314
  • 19: Conclusions 315
  • References 327
  • Index 329
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