Xinshen Diao, Shashidara Kolavalli, and Danielle Resnick BOOK LAUNCH Ghana’s Economic and Agricultural Transformation: Past Performance and Future Prospects Co-Organized by IFPRI and the CGIAR Research Program on Policies, Institutions, and Markets (PIM) OCT 9, 2019 - 12:15 PM TO 01:45 PM EDT

2. Ghana’s Economic and
Agricultural Transformation
Past Performance and Future Prospects
Edited by
XINSHEN DIAO, PETER HAZELL, SHASHIDHARA
KOLAVALLI, AND DANIELLE RESNICK
International Food Policy Research Institute
Oxford University Press

3. Ghana’s Economic Structural
Transformation and Urbanization
Impacts on Rural Jobs
Xinshen Diao
International Food Policy Research Institute
Washington, DC | October 9, 2019

4. Structural Transformation without Industrialization
Source: Authors’ calculation using data obtained from Gronigen Growth and Development Centre (GGDC, Timmer et al. 2015)
-0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0
2000-2015
1984-2000
Economywide labor productivity growth within sectors and from structural change
(annual growth rate, percentages)
Within-sector growth in agriculture
Within-sector growth in mining
Within-sector growth in manufacturing
Structural change due to manufacturing
Productivity growth in
manufacturing
Negative role of manufacturing
to structural change
Structural change from non-
manufacturing

5. Urbanization and Declined Shares of Rural Agricultural
Households
Source: Authors’ calculation using data of 2000 and 2010 Census.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2010 2000 2010 2000 2010 2000 2010 2000 2010 2000 2010
With city Without city With city Without city With city Without city
North South National
Distribution of rural households by family members' primary jobs: agriculture only,
nonagriculture only, and mixed occupations
Agri. only & no jobs Non-agri. only Mixed

6. Rural Nonfarm Jobs Concentrated in Informal Activities
Source: Authors’ calculation using data of 2000 and 2010 Census.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2000
2010
2000
2010
2000
2010
NorthSouthNational
Types of nonfarm jobs amongst ‘non-agriculture only’ rural households
Formal only Inf. mfg only Inf. trade only Inf. mfg & trade Inf. others Formal & informal combined

7. Urbanization and the Uptake of Labor-saving Technologies
in Farming
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0
Landproductivity
Labor productivity
Trends in land and labor productivity, 1991-2011The induced innovation
hypothesis predicts that
urbanization should lead to
more intensive farming
practices; we find only limited
support to this hypothesis in
fertilizer use, and it is mainly
used in the North to offset
declining soil fertility and
regardless the level of
urbanization across districts
Mechanization and increased
use of herbicides can raise labor
productivity but may not lead to
higher land productivity
Source: Authors’ calculation using GGDC data for agricultural value added and agricultural

8. Ghana’s Agricultural Transformation
Shashidhara Kolavalli
Development Strategist
Washington | October 9, 2019

9. Decent Performance
 Ghana’s agriculture has performed reasonably well:
o Agricultural output grew at 4.5 percent in 1994-2013; and it has kept up with national
demand for most cereals.
o Both land and labor productivities have increased, with much faster growth in labor
productivity.
o Increased ag labor productivity along with diversification into nonagricultural
opportunities has increased rural incomes and helped reduce rural poverty.
 But Ghana has failed to
o Compete internationally to develop new lines of exports apart from cocoa.
o Or compete domestically to reduce growing dependence on imports of rice, poultry,
and many other processed foods.

10. Could the Growth be Sustained?
Not without increasing land productivity through adoption of intensive
farming practices
o Agricultural growth has depended predominantly on expanding the cropped area
At the expense of virgin forest and by shortening fallow periods
Forest frontier is nearly exhausted
o There is little evidence that farmers are successfully switching to yield enhancing
technologies that will be essential for future agricultural growth
o There is a growing soil fertility problem – considerable soil degradation, compromising
robust crop responses to fertilizer applications

11. Why hasn’t the Country Done Better?
 The government has maintained a favorable
domestic terms of trade for agriculture, but
that has not been enough
 Government has made few direct effective
interventions along the value chain since
reforms, other than in cocoa
 Little investment beyond cocoa sector
o Ag spending has fallen short of 10%
government total expenditure
 only 2.1-2.8% since 2001
o The amount spent by the Cocobod on cocoa far
outweighs the amount spent by the government
on the noncocoa subsectors
 Though returns of spending are higher in
noncocoa than cocoa
 Had the government done more to help
farmers access improved seeds, irrigation,
roads, credit, markets, etc., there might have
been more widespread adoption of yield-
enhancing technologies to raise land
productivity
0
200
400
600
800
1000
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011Constant2006GHS,million
Total Noncocoa Cocoa
Source: Authors’ illustration based on compiled data in ch.7 of the book

12. Does the Cocobod Offer Some lessons?
 Caveats:
o The model is not suitable for all crops
o The board is arguably more centralized than it needs to be, and there is
considerable room to increase accountability and improve efficiency
o While it addresses critical areas, it hasn’t been entirely successful
 What are some areas that need to be addressed proactively in value chains
o Quality control (standardization) – exports of vegetables, for example
o Inadequate supply response to private investments downstream – cashew
and rice milling,
o Appropriate fertilizers and nutrient management packages for many field
crops
o Diseases – tomato disease complex in Upper East region
o Availability of improved seeds – government is primarily just a buyer

13. Governance and Policy Choice in
Ghana
Danielle Resnick
International Food Policy Research Institute
Washington, DC | October 9, 2019

14. Where do Policy Choices Emerge?
 Strong democracies, like Ghana, often associated with pro-poor investments
and outcomes fundamental for growth
 But transformation requires solving market failures (Hausmann et al. 2008)
o Self-discovery externalities – identifying new products
o Coordination externalities – simultaneous investments upstream and downstream
o Missing public inputs – legislation, accreditation, infrastructure
 Experience from “developmental states” highlights the need for political
commitment, public sector capacity, and state-business coordination

15. Commitment to Policy Driven by Electoral Cycle
 Two-party system engenders
big spending initiatives to win
voters
 Backtracking and volatility is
common with change of
political administration
 Political budget cycles pose
ongoing risk, especially in
light of debt distress
Source: IMF DataMapper and WDI

16. Public Sector Capacity Remains Weak
 Public sector institutional reforms were not
pursued with the same vigor as wage bill
reforms
 Low capacity to implement and engage in
M&E of large-scale initiatives, or to
anticipate opportunities and threats (e.g.
MD2 pineapple)
 Exacerbated by devolution of agricultural
functions to local governments, which are
severely under-resourced
Rule of Law
Participation &
Human Rights
Public
Management
Business
environment
Infrastructure
Human
development
30
40
50
60
70
80
90
100
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
IbrahimGovernanceIndex(0to100)
Source: Ibrahim Index of African Governance

17. State-Business Coordination needs to be Enhanced
 Historically fraught relations with private sector, weak business associations
 Deficit spending increases interest rates and reduces credit for private sector
 Sub-standard legal and regulatory environment
10.5 10.9 11.7 13.1
14.7 16.2
23 23.1
28 28.3
31.8
61.8
65.7
68.5
Domestic credit to private sector (% of GDP), 2018
Source: WDI
Distance to frontier of good practices
in laws and regulations (100= better)
Source: Enabling the Business of Agriculture, World Bank 2017

18. Current Agricultural Initiatives: New Wine in Old Bottles?
 Agriculture central in national policy and efforts to
improve seed regulation and develop value-chains
 But tendency towards high profile projects that win
votes rather than address market failures
 Examples of policy inconsistencies
o 1D1F relies on commercial banks to provide loans to private
entrepreneurs but financing public debt proving more attractive
o Local government extension agents budget-constrained but
new districts constantly created (216 to 254)
Ag extension motorbikes sitting
idle due to no fuel or licenses,
Shai Osudoku, 2019
Photo: Danielle Resnick, IFPRI

19. Conclusions
 Many agricultural growth opportunities could be seized with more proactive
policies on ag R&D, extension, financial systems, value chain coordination,
input quality, and more
 Implementing these policies effectively requires long-term commitment,
capacity, and coordination so, need strategic, targeted approach that is
affordable and politically appealing
 Options
o “First mover” strategies focused on a non-traditional export crop or priority food staple
that competes with imports
o Spatially concentrated agro-clusters and agro-industrial parks