Economic Reform and Democratic Transition in Ghana

Article excerpt

Though many factors can threaten democratic rule in Africa, sustainable democracy is not easy to build during economic difficulties. It thus is important to examine the politics of economic reform in the context of promoting democracy. Structural adjustment based on neoclassic economic theories has been a dominant development strategy for the last two decades. The major components of adjustment programs, introduced in response to pressure from international financial institutions, include cuts in subsidies to prices of basic goods and services, elimination of price controls, devaluation of currencies, and free trade, Given their negative impact on economic welfare, these policies have major ramifications for political stability.(1) In some countries, including Zambia in 1990, growing popular opposition resulted in street riots; followed by change in the political leadership. Thus, especially at the early stage of structural adjustment that requires tough austerity measures, opposition may need to be repressed for the survival of the regime.(2)

In the midst of pessimism in Africa, Ghana, along with Burkina Faso, Zimbabwe, and Gambia, has shown better economic performance than other countries.(3) In addition, pressure for democratization resulted in the return of a multiparty political system for the first time in more than a decade. The victories of the ruling party in the 1992 and 1996 national elections legitimized the liberal economic reform sponsored by international donors. Democratization following economic recovery in Ghana may suggest a model of political economy replicable to other African countries.

This article examines the political economy of democratic transition in Ghana. More specifically, it assesses the relationships between liberal economic reform and democratization. Did the Ghanaian experience of implementing structural adjustment programs have a positive impact on the country's efforts to build democracy? In what ways are popular interests important in the political process? What are the prospects for sustainable democracy? After briefly reviewing political legacies before the Rawlings regime, I will concentrate in the major pan of this article on analysis of the recent democratization process and examine not only what brought about democratization but also the conditions needed for building a stable political system.

ECONOMIC CRISIS AND POLITICAL CHANGE, 1957-1982

Ghana saw nine changes of government between 1957 and 1983, including four military coups, but it has escaped the violence seen in most other countries. In contrast to much of Africa, ethnicity has played a relatively minor role in political conflict.(4) For the most part, economic mismanagement has been the most common source of dissatisfaction. Problems with the distribution of resources among interest groups, along with economic stagnation, often created conditions for political protests.

Since its independence, the role of the state in Ghana has varied with the economic ideologies and political support bases of different governments. During the Nkrumah regime (1957-1966), the state was involved in various socialist development projects.(5) The government was supported by urban-based constituents who favored an expanded state sector, rapid industrialization, and economic self-sufficiency. Until the early 1960s, efforts to build major infrastructure and industrial bases were helped by revenue from export of cocoa. However, decline in cocoa prices in the world market and the cost of big projects produced massive imbalances of payments. The instability of the Nkrumah development strategies are related to their dependence on expensive, imported capital-intensive technology and on heavy investment in the infrastructure. To finance such a program the government had to borrow from the world banking system, engage in deficit financing and monetary expansionism, and impose higher taxes. Political discontent following economic instability facilitated the collapse of the nationalist Nkrumah government. …