Country Economics:

Answer

Country Economics:

Ghana

Description of Ghana and its Economy

            Ghana is a West African country bordering Cote d'Ivoire, Burkina Faso, and Togo. The nation has a total population of 28.83 million people as of 2017 and a 2.2% annual population growth rate. It sits on a 238.5 thousand square kilometers with a population density of 126.7 people per square kilometer (The World Bank 2017). The country has a democratic government and is considered one of the most stable states in West Africa since the change to multiparty democracy during the late 20th century. The nation has a parliamentary system of government whose power is shared between the president, legislature, cabinet, and the judiciary (Elisha 2017). Ghana is also a multiparty state where parliamentary and presidential elections are held after every four years. The legislative powers in Ghana are exercised in a unicameral parliament consisting of 275 members and the legislation approved by the president for adoption.

            Like many other world economies, Ghana has a free market economy where households and corporations act in their self-interest to define how the economic resources are allocated, what goods to produce and the buyers to the manufactured goods (Agarwal 2019). In this type of economy, there is minimal government intervention in the market economy. Free market economy separates the government from the market, preventing it from aligning its interests with those of the market. As of 2017, Ghana had a Gross Domestic Product of 59 billion US Dollars, registering annual GDP growth of 8.1%. Some of the major industries contributing to this economic growth include fishing, agriculture, construction, forestry, and mining industries. In 2017, the country’s exports accounted for 35% of the GDP while the imports accounted for 38% of the national GDP.

Barriers Preventing Ghana from Escaping Poverty

            According to the World Bank (2017), 23.4% of Ghana’s population is below the poverty line, with 13.3% of the total population living on less than $2 a day. These headcount ratios indicate the difficulties the country is facing in its effort to achieve full economic development. Some of the barriers to overcoming poverty in Ghana include:

            Income Inequality. One of the obstacles affecting Ghana’s efforts to eradicate poverty is Income inequality between households. The bottom 20% of the Ghanaian population only share about 4.7% of the national income. Based on the size distribution in 2012, the consumption per capita among lowest percentile was seven times lower than that of the top decile, causing the Gini index to increase by 8% (The World Bank 2015). Poverty and inequality go hand in hand; thus, the growth of income disparity in Ghana derails the efforts to reduce poverty.

            Gender Gaps. Despite being poor, women face additional barriers such as lack of proper education normally driven by social norms like early marriages. Such challenges hinder the government policies geared towards reducing poverty in the country. Similarly, there are always insufficient opportunities for poor females who lack the required skills to earn a living. This has contributed to the high percentage of the population living on less than a dollar a day in Ghana.

            Lack of Adequate Education among the Population. In developing economies like Ghana, high-income gains from the job labor market are always attached to higher education levels. The government and corporate employers value education attainment; thus, those with no college degrees are paid lower wages in the job market leading to the income disparity and poverty (Gillis Carl and Gerardo 2001). Despite having over 100% gross primary school enrollment rates, secondary school enrolment in Ghana is 70%. This implies that 30% fail to attract high-income jobs in the market. 

            The effective policies that the government can implement to reduce poverty and inequality and improve health and education outcomes in Ghana include:

            Progressive taxation. A progressive tax system enables the government to impose fewer taxes on low-income earners and collect high taxes on high-income earners (Young 2011). This system is based on the taxpayers’ ability to pay. Since it takes retrieves higher taxes from high-income individuals than low-income taxpayers, it helps in restoring income inequality in the economy.

            Changing the size distribution by transferring property ownership to the poor. The government can relocate assets ownerships to the poor to encourage them to participate in the economic market through the production of goods and services. The poor can use the income earned from the use of transferred assets to improve their living standards.

            Providing cheaper health and educational services to poor households. Studies indicate that proper healthcare positively affects wages, productivity, and employment. Therefore, by providing health services to the poor communities, the government improves their productivity and ability to participate in economic development (Gillis Carl and Gerardo 2001). Like in other developing nations, the better educational outcome in Ghana is attributable to additional years of education. Thus, affordable education increases opportunities for the population.   

            Creating monetary support programs for poor households. The government can implement programs that offer public goods and services to the disadvantaged community to reduce poverty in Ghana.