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The IGC Ghana office has announced five new research projects. The topics include dealing with Ghana’s newfound oil, making education more efficient and more equitable, and improving the quality of governance.
It is by now common knowledge that natural resources can be a curse as well as a blessing. When commercial quantities of oil and gas were found off the coast of Ghana in mid 2008, feelings were understandably mixed. Will the newfound revenues lead to rapid economic development and poverty reduction? Or will they make the government reliant on an unpredictable and volatile source of income – and one that reduces the need to appease the taxpaying voter. There is also a chance they will lead to ‘Dutch disease’, where the oil and gas exports push up the exchange rate making other exports less competitive.
How to manage the economy when these issues arise? That is the main question asked by Charles Ackah and Robert Darko Osei of the University of Ghana and Oliver Morrissey of Nottingham University in a new IGC research project. The study will provide:
i. A descriptive review of government budgets and budget statements and the effect of oil revenues on these.
ii. A simulation of possible effects of the oil revenue on factors such as tax revenue, government spending, inflation, and exchanges rates.
Based on this analysis, the research will ask whether the Ghanaian government’s current policies are on course for promoting long-term economic growth and development.
Investment from other countries (known as foreign direct investment or FDI) is seen as essential for development. Foreign direct investment offers many potential advantages to developing countries: it is a source of capital, helps to create jobs, boosts wages, raises the productivity of domestic firms and workers, and promotes economic growth. As a result, a better understanding of how other factors affect FDI, such as natural resources and the quality of institutions that manage the economy, is welcome. Continuing the focus on natural resources, research by Elizabeth Asiedu of Kansas University will seek to explore the following questions:
(i) Do good institutions help attract FDI to developing countries?
(ii) What role do natural resources have in determining the relationship between institutions and FDI?
(iii) Is the relationship any different for Sub-Saharan African countries?
(iv) What are the lessons for Ghana and other oil exporting countries in Sub Saharan Africa?
Education is another key ingredient for development – particularly education that meets the needs of a growing economy. One area where the need is particularly acute is higher education (or tertiary education) in areas such as computer science that will help the industrial sector develop. Simon Bawakyillenuo of the University of Ghana seeks to explore how higher education programmes in both public and private institutions in Ghana can be shifted to help meet the demands of industry.
The study adopts both qualitative and quantitative approaches. The quantitative aspects will consist of two surveys (industry and higher education institutions). The qualitative aspects will consist of a national stakeholder discussion and a comparative study of practices and experiences from other low- and middle-income countries whose higher education aligns better with the needs of industry.
From higher education to basic secondary education, Kehinde Ajayi of Boston University seeks to identify how the information available to parents and children in Ghana influences the choice of school they attend.
Like many other countries across the world, Ghana has a centralised application system for admission to secondary school. Students who complete junior high school can rank up to six senior high school choices and are admitted based on their performance on the Basic Education Certificate Exam (BECE) – which is a nationally set exam taken at the end of junior high (in the ninth grade of school). But students must apply to senior high schools before they sit the BECE and they can only select a limited number of schools. As a result, students enter into the school selection process with ‘incomplete information’ about their academic performance and their likelihood of gaining admission into any of their chosen schools.
Previous research has shown that students from poorer backgrounds apply to worse senior high schools than their wealthier counterparts. This may mean that talented or motivated students from poorer backgrounds are failing to get a high-quality secondary education simply because of a lack of access to information to get them into the best schools. This project addresses the question of why poorer students do not apply more ambitiously and, in particular, whether a lack of information is responsible for this. Anecdotal evidence suggests that students from wealthier backgrounds receive more guidance during the application process and are more confident about their admission prospects.
The study will survey a sample of 4,000 students about their understanding of the school application process, their expected exam performance, and beliefs about their admission chances. These responses will be used along with administrative data on students’ application choices, actual exam performance, and eventual admission outcomes to examine students’ decision-making processes and to analyse the role of access to information.
Overarching all development questions is the question of governance. Robert Darko Osei of the University of Ghana will explore the drivers of change in the quality of governance in a developing country like Ghana.
While previous studies have pointed out a number of potential determinants of change, such as democracy, press freedom, or leadership, the study is particularly interested in the effect of the business sector. While good governance has been shown to have a positive effect on private sector development, the project focuses on the reverse effects. That is, what influence does the private sector have on government?
The main hypothesis is that the private sector helps to keep government in check and that this influence is likely to be more sustainable and stronger in the long run than any outside pressure. This is because governments need taxes from the private sector to continue functioning and so are likely to be more responsive to their demands than those from outside governments.
The study will be divided into two parts. The first part will analyse the main determinants of government regulations over time and across countries using data from 140 countries since 1970. The second part will be an in-depth analysis of the political economy of change in Ghana. Upon completion, the study aims to pinpoint the main drivers of change in governance in Ghana and in doing so inform policy debate and ultimately to lead to better policymaking.
Find out more about all these projects on our Ghana country page.
