Impact of democratic political transition on the Economy of Ghana

Abstract

In this chapter, we examine the impacts of democratic political transition on the economy of Ghana based on the assessment of the impacts on the macro-economy and industry groups. This examination is done from a human development perspective. Human development incorporates shared economic growth that ensures minimal adverse impact on the environment while protecting citizens against deprivation, securing for them peace and security as well as participation in economic and political governance processes. It is dependent on the attainment of peaceful democratic transitions given the rancour that is characteristic of the quadrennial national elections in Ghana. This is because democratic political transitions since 1992 have coincided with reduced focus on the socio-economic development of the country. The current winner-takes-all political system encourages the emergence of electoral winners and losers who are less likely to make efforts to develop a more inclusive governance structure to tackle the numerous socio-economic problems facing the country. The rest of this chapter is organized along the following lines. The next section deals with the economic theoretical framework of the study. The macroeconomic analysis of impacts of democratic transitions are discussed next with emphasis on impacts measured on the bases of inflation, economic growth, money supply and exchange rate and government revenues, expenditures and budget deficits. This section is followed by a discussion of impacts on selected industries and the stock market. A few conclusions are reported at the end of the chapter.