In Ghana, years after Jerry Rawlings left power in 2000, and with elections becoming competitive, political patronage and personalisation remain high. Public institutions are weak and there are widespread perceptions of corruption. A winner-takes-all approach to governance, implicitly brought about by the 1992 constitution, has
taken hold. Ruling parties rarely share power and work to satisfy their supporters, who expect to be rewarded for mobilising votes for their party.
This research uses the ESID political settlements framework to explain how Ghana’s politically competitive and highly personalised settlement affects the business environment and growth processes. It analyses the ways in which the current political settlement and the structure of the domestic economy shape the relationship
between the state and the business sector. This political economy understanding is used to explain why Ghana’s sustained growth has occurred without a corresponding transformation of the economy towards more high productivity sectors.
Key findings:
- Ghana has experienced sustained growth without structural transformation. The agriculture sector has declined and the manufacturing sector has stagnated. There has been growth in the services sector, but it is characterised by low productivity and low wages
- Ghana’s export products have changed, but are still dominated by primary products
- political patronage and personalisation remain rife in the political settlement. Public institutions are weak and there are widespread perceptions of corruption
- weak public sector capacity hampers the production of quality public goods and management of the macroeconomy to facilitate growth
- although most firms in Ghana are small and medium-sized enterprises in the manufacturing sector, mining firms have closed relationships with the political elite, and more power lies with them. The relationship between the state and business remains closed to new firms, especially those in the manufacturing sector