Growth, comparative advantage and the economic effects of government : a case study of Ghana

• Main Author: Teal, Francis John
• Published: SOAS, University of London 1984
• Subjects: 330; Africa
• Online Access: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.274647

Economic historians of West Africa have argued that market principles have determined economic organisation in the area. In Ghana such market principles have been associated with long periods of growth in the cocoa sector. However, this growth has not led to incomes comparable with those of developed countries. Our central question in this thesis is why have markets failed to produce such levels of income? A first step to answering this question is provided in chapter 2 where we set out a model for the growth of the cocoa sector in Ghana to examine how markets have succeeded in generating growth and to analyse the factors limiting growth. Chapters 3 and test the implications of the model for both the major periods of growth in the cocoa sector and extend the analysis to the whole economy. Rapid aggregate per capita growth is shown to have occurred until 1939, in contrast to stagnation after 1950. Growth and productivity in the cocoa sector is examined in detail. In chapters 5 and 6 we investigate the role of market failure in limiting the growth process already documented. We argue in chapter 5 that one rationale for public sector intervention offered in development economics is an assertion of the empirical importance of market failure, particularly in labour, trade and investment markets. We show that while some of these aspects of market failure were present they were not empirically important. The market failure that was important for the cocoa sector, analysed in chapter 6, was in the market for technical knowledge. We show that the causes of poverty in Ghana before 1939 are due to this market failure, while after 1950 the cause must be sought in the public sector's unwillingness for rational political reasons to operate through markets. A final chapter summarises the argument.