Ghana Case Study

1. After gaining independence from Britain, Ghana's economy languished for three decades.
Why was this the case? What does the Ghana experience teach you about the connection
between economic and political systems and economic growth?

1. Ghana suffered from military coups and the governments adopted a socialist
ideology. Thus, there were many state-owned businesses and properties. This
caused an increase in corruption and inflation within the economy, where people
depended on cash crops with foreign countries. Given Ghana’s high level of
corruption by the governments, it made it difficult for the country to produce
economic growth. Once there was a decrease in the corruption, Ghana began to
thrive economically.

2. What where the main changes that Gerry Rawlings made in the Ghanaian political and
economic systems? What were the consequences of these changes? What are the lessons
here?

1. Rawlings organized an anticorruption drive and was influenced by Western

governments to embrace democratic change. This leas to a decrease on the
restrictions on the press and people were given equal access to the media. As
president, Rawlings liberated the economy, getting rid of state-owned enterprises,
institution market-based reforms, and opening international affairs. This led to a
positive impact on the economy.

3. What external forces helped to persuade Rawlings to change political and economic
practices in Ghana? Do you think he would have made the changes he did without these
external forces?

1. Western governments and the International Monetary Fund persuaded Rawlings

to embrace democracy. Rawlings would not have made the changes without
intervention. He had adopted a socialist ideology, and it was only through
pressure that Rawlings introduced democratic reforms and policies.
4. If Ghana had discovered large oil reserves in the 1980s, instead of the 2000s, do you
things might have played out differently? Why?

1. There might have been more corruption by the government. Though oil reserves
would have generated revenue in 1980, the income would most likely not have
gone towards creating a stable economy and helping the residents as there were
still socialist ideas and reforms around during that time.

5. What is the difference between the approach of Nigeria toward oil revenues and that of
Ghana (the Nigerian experience is documented in the Country Focus feature in this
chapter)? Which approach is in the best long-run interests of the country?

1. As soon as Ghana began receiving money from the oil, laws were created in order
to shield the revenue away from corruption from the government. Nigeria made
extra revenue from increasing fuel prices; however, the dictator spent that money
at his own discretion. This approach did not have the country’s best interest in
mind. The approach that Ghana took toward oil revenue was the best in protecting
the country from government abuse and corruption.

6. What does Ghana need to do to remain on its current track of sustained economic
growth?

1. Ghana needs to improve living conditions for residents, upgrade its power and
roads. Ghana would also benefit from more jobs and local programs to assist in
poverty and create a stable economy.