Explaining the Growth of Government Spending in Ghana

Government spending is a reflection of government policy choices. However, the implications of government spending growth necessitate an understanding of the drivers of the growth of government spending. The present paper modifies the median voter model to explain the growth of government spending by introducing foreign aid, public debt, and democracy. The paper argues that these variables are important drivers of government spending for developing countries, hence a model explaining the growth of government spending of these group of countries that ignores the potential impact of foreign aid, public debt and democracy does not capture fully what determines the growth of government spending. Such a model is too simplistic and less relevant for policy purposes. The paper therefore makes use of annual time series data to determine the long-and short-run impact of per capita income, tax share, minimum wage, population growth, foreign aid, public debt and democracy on the growth of government spending in Ghana over the period 1980-2012. The autoregressive distributed lag (ARDT) bounds test for cointegration and the error correction model (ECM) procedures were used for the estimation. Additionally, the paper provides results of generalized forecast error variance decomposition in order to determine the effect of innovations in both the dependent and independent variables on the dependent variable. The findings reveal that per capita income, tax share, population growth, minimum wage, foreign aid, public debt, and democracy are key determinants of the growth of government spending in the long-run. With the exception of minimum wage, these variables are also key determinants of the growth of government spending in the short-run. Variance decomposition results suggest innovations in per capita income and population growth generally account for the largest variations in government spending over the horizon considered. Also, innovations in foreign aid, public debt, and democracy are responsible for significant variations in government spending. The findings and policy recommendations of the paper provide vital information for policy implementation in Ghana

Macroeconomic determinants of interest rate spreads in Ghana

Purpose: The purpose of this paper is to examine macroeconomic determinants of interest rate spreads in Ghana for the period 1980-2013. Design/methodology/approach: The autoregressive distributed lag bounds test approach to cointegration and the error correction model were used for the estimation. Findings: The results indicate that exchange rate volatility, fiscal deficit, economic growth, and public sector borrowing from commercial banks, increase interest rate spreads in Ghana in both the long and short run. Institutional quality reduces interest rate spreads in the long run while lending interest rate volatility and monetary policy rate reduce interest rate spreads in the short run. Research limitations/implications: The depreciation of the Ghana cedi must be controlled since its volatility increases spreads. There is a need for fiscal discipline since fiscal deficits increase interest rate spreads. Government must reduce its domestic borrowing because the associated crowding-out effect increases interest rate spreads. The central bank must improve its monitoring and regulation of the financial sector in order to reduce spreads. Originality/value: The main novelty of the paper (compared to other studies on Ghana) lies on the one hand; analysing macroeconomic determinants of interest rate spreads and, on the other hand, controlling for the impact of institutional quality on interest rate spreads in Ghana

Regionalism and Economic Integration in Africa: A Conceptual and Theoretical Perspective

A well-established strand of the literature on regionalism and economic integration has made clear that economic, geopolitical, and socio-cultural relationships across the globe, for which Africa is no exception, have been changing rapidly in the last few decades. African leaders have been embracing these concepts as vital elements of their development agenda and have engaged their countries in a number of integration arrangements. This study has investigated regionalism and economic integration in Africa from a conceptual and theoretical perspective. The study identified that (i) the rationalist’s theory of neorealism and neoliberalism, (ii) the social constructivism theory, and (iii) several theories of economic integration are very relevant in explaining the formation of regional and economic blocs in Africa. Theories of economic integration that focus on trade, economic interdependency, monetary, fiscal, and political policy coordination seem to be the main forces driving regionalism and economic integration on the continent. The study revealed transportation and mobility of factors of production, limited intra-African trade, multi-memberships, macroeconomic divergence, and conflicts as key factors hindering the success of regionalism and economic integration in Africa. Although regionalism and economic integration on the continent is plagued with these challenges, there are opportunities and possibilities in the power and energy sectors, the manufacturing sector, and in private-public partnerships that the continent can explore to accelerate Africa’s speed of regional and economic integration, crucial for economic growth and development

ESSAYS ON LIBERALISATION, GROWTH AND DEVELOPMENT IN SUB-SAHARAN AFRICA

Research on economic growth and development in developing countries has often highlighted the role of liberalisation policies (economic and political) in improving economic performance in the developing world. In sub-Saharan Africa, in particular, efforts at fostering economic growth and development have not only resulted in the adoption of these policies, but have also led to the proliferation of regional economic integration (include monetary unification). Nonetheless, the impact of these policies on economic performance continues to be a subject of debate among policy makers, development partners, academic researchers, and the international community at large. This debate has become increasingly important in light of the challenges facing the aforementioned agents in helping to improve the economic performance of these countries. This thesis focuses on this topic providing empirical evidence for sub-Saharan African countries. The first chapter uses post-liberalisation data on Ghana and focuses on the extent to which trade openness and foreign aid inflows impact on economic growth. Ghana, being one of the forerunners to adopt liberalisation policies in sub-Saharan Africa, has received commendations from the international community for its post-liberalisation economic growth performance. This has increased government commitment in recent years to open the economy to international competition. Moreover, foreign aid inflows over the period have been relatively large. The study, which employs the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration, provides empirical findings, which clearly indicate that the impact of both trade openness and foreign aid on Ghana's post-liberalisation economic growth is positive and statistically significant in both the short-run and the long run, although this is somewhat reduced by their interaction. In addition, the study reveals long run economic growth benefits of Ghana's political system whilst government spending and labour force performance retarded economic growth over the study period. The empirical findings and policy recommendations are relevant for Ghana's long-term economic growth policy reforms. The second chapter, taken cognisance of the fact that sub-Saharan Africa has been characterised by low-income levels for decades, analyses the impact of economic globalisation and democracy on income levels in the area using panel cointegration techniques. The study considers a composite indicator for economic globalisation and several indicators of democracy and highlights the essence of the simultaneous adoption of economic globalisation and democracy for sub-Saharan African countries. The empirical results, based on a sample of 31 countries over the period 1980-2005, clearly indicate that, whilst the total long run impact of economic globalisation on income levels has been beneficial, the total long run impact of democracy has been the bane of the level of income in sub-Saharan Africa. The study concludes that policy reforms should be aimed at improving democratic institutions in sub-Saharan Africa for its potential benefits to be realised The third chapter focuses on the implications of trade openness, foreign aid and democracy for the fulfilment of Wagner's law in West African Monetary Zone (WAMZ) countries. Although the impact of trade openness, foreign aid and democracy on government expenditure in developing countries has been emphasised in the literature in recent decades most recent studies of Wagner's law have often neglected the increasing role played by these policy variables. The study provides an empirical analysis of the long run implications of trade openness, foreign aid and democracy for the fulfilment of Wagner's law in WAMZ countries using panel data techniques for the period 1980-2008. The study finds the existence of Wagner's law in WAMZ countries, but only when the role of these policy variables has been catered for. The analysis concludes that, if these countries are to meet the fiscal convergence criteria and ensure the sustainability of a single currency area, explicit sets of restraint on the national authorities and innovative and efficient ways of domestic revenue generation necessary to ensure that government revenue keep pace with its expenditure become crucial, because the monetary union by itself may not necessarily ensure fiscal discipline. The fourth chapter focuses on the relationship between democracy, government spending, and economic growth. Although, economic theory predicts that various core functions of governments are growth enhancing, its spending in non democratic countries often goes beyond these core functions, namely into rent-seeking and non-productive activities. The study employs the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration to investigate the extent to which democracy and government spending have had an impact on economic growth in Ghana over the period 1960-2008. The empirical results obtained are encouraging, revealing support for the high efficiency of government spending in democracies hypothesis. The study demonstrates that democracy and government spending go hand in hand in providing a complementary role to impact positive on economic growth in Ghana in both the long-and short-run. The fifth chapter investigates the impact of trade openness on economic growth and development for a sample of 85 middle-income countries over the period 1970-2009. The study employs non-stationary heterogeneous panel cointegration techniques that take into consideration the impact of cross-section dependence. The analysis reveals four important findings. Firstly, that trade openness has been one of the main drivers of the level of development, but not of economic growth in middle-income countries. Secondly, that trade openness is both a cause and a consequence of the level of development in middle-income countries. Thirdly, that neglecting the impact of cross-section dependence overestimates the coefficient linked to the long-run relationship between trade openness and development. Lastly, and most importantly, that these results are consistent for all the 20 middle-income sub-Saharan African countries included in the sample

Inflation Targeting Framework and Interest Rates Transmission in Ghana: An Empirical Investigation

This paper investigates the long-and short-run rate of transmission of the prime rate to interest rates since the implementation of inflation targeting policy in Ghana. Monthly data covering the period January 2002 to March 2016 is used. The Johansen and Hansen parameter instability cointegration, the FMOLS and DOLS estimation procedures were used. The long-run results show incomplete pass-through of the prime rate to commercial banks’ lending and deposit rates but over pass-through to the 91-day Treasury bill rate. The short-run adjustment shows relatively slow transmission of the prime rate to the respective interest rates. Given the findings, relevant policy suggestions are provided

"It is very difficult in this business if you want to have a good conscience": pharmaceutical governance and on-the-ground ethical labour in Ghana

The governance of pharmaceutical medicines entails complex ethical decisions that should, in theory, be the responsibility of democratically accountable government agencies. However, in many Low- and Middle-Income Countries (LMICs), regulatory and health systems constraints mean that many people still lack access to safe, appropriate and affordable medication, posing significant ethical challenges for those working on the “front line”. Drawing on 18 months of fieldwork in Ghana, we present three detailed case studies of individuals in this position: an urban retail pharmacist, a rural over-the-counter medicine retailer, and a local inspector. Through these case studies, we consider the significant burden of “ethical labour” borne by those operating “on the ground”, who navigate complex moral, legal and business imperatives in real time and with very real consequences for those they serve. The paper ends with a reflection on the tensions between abstract, generalised ethical frameworks based on high-level principles, and a pragmatic, contingent ethics-in-practice that foregrounds immediate individual needs – a tension rooted in the gap between the theory and the reality of pharmaceutical governance that shifts the burden of ethical labour downwards and perpetuates long-term public health risks

Trade Openness, Growth and Development: Evidence from Heterogeneous Panel Cointegration Analysis for Middle-Income Countries

Este  artículo examina el impacto del grado de apertura exterior en el crecimiento y desarrollo económicos de un grupo de 85 países de renta media en el periodo 1970-2009. Se emplean técnicas de cointegración en un panel heterogéneo no estacionario con el fin de tomar en consideración el impacto de la dependencia de sección cruzada. Del análisis realizado se derivan tres conclusiones: primera, que el grado de apertura exterior ha sido un factor clave en el proceso de desarrollo de los países de renta media, pero no en su ritmo de crecimiento económico. Segunda, que existe una relación de doble causalidad entre apertura exterior y nivel de desarrollo. Tercera, que la no consideración del impacto de la dependencia de sección cruzada da lugar a sobrestimar el coeficiente que vincula apertura exterior con desarroll

ガーナ，アシャンティ火山帯南部に分布する古原生代変火山岩類のSr-Nd 同位体組成

Neodymium (Nd) and strontium (Sr) isotopic data are presented for Paleoproterozoic metavolcanic rocks in the southern part of the Ashanti volcanic belt of Ghana. The metavolcanic rocks are predominantly basalts/basaltic andesites and andesites with minor dacites. Two types of basalts/basaltic andesites (B/A), Type I and Type II, have been identified. The Type I B/A are stratigraphically overlain by the Type II B/A, followed by the andesites and the dacites. The analyzed volcanic rocks commonly have low initial (87)Sr/(86)Sr ratios consistent with previous studies on Paleoproterozoic rocks from the West African craton. The LREE-depleted, tholeiitic Type I B/A exhibit back-arc basin geochemical signatures and show high positive epsilon Nd (i.e., ε(Nd) (2.1 Ga) = +3.89 to +7.21), which suggest a long term depleted source and also indicate that they were produced in an entirely oceanic environment devoid of influence of continental crust. The isotope signatures are thus consistent with the previously published trace element data of the Type I basalts/basaltic andesites in suggesting that their parent magma was generated from a depleted mantle. The Type I B/A have Nd model ages (T(DM2)) of 1.83–2.09 Ga similar to their formation ages, suggesting that they were juvenile at their time of formation. The andesites and the Type II B/A andesites show LREE-enriched patterns and exhibit characteristics of subduction zone-related magmas, and show initial ε(Nd) (2.1Ga) values of –1.15 to + 1.35 and Nd model ages (T(DM2)) of 2.32–2.58 Ga. The LREE-enriched dacitic porphyry also exhibits characteristics of subduction zone-related magmas, and have initial ε(Nd) (2.1Ga) value of –2.24 and Nd model ages (T(DM2)) of 2.64 Ga. The Nd isotopic data confirms the juvenile character of the Birimian crust, but also suggests some contributions of a pre-Birimian crustal material (or Archean?) in the genesis of some of the metavolcanic rocks. Our isotopic result is consistent with the island arc complex model which views Paleoproteozoic terranes of West Africa in the context of subduction–accretion processes

Absorption of Acoustic Phonons in Fluorinated Carbon Nanotubes with Non-Parabolic, Double Periodic Band

We studied theoretically the absorption of acoustic phonons in the hypersound regime in Fluorine modified carbon nanotube (F-CNT) Γ q F − CNT and compared it to that of undoped single walled carbon nanotube (SWCNT) Γ q SWCNT . Per the numerical analysis, the F-CNT showed less absorption to that of SWCNT, thus ∣ Γ q F − CNT ∣ < ∣ Γ q SWCNT ∣ . This is due to the fact that Fluorine is highly electronegative and weakens the walls of the SWCNT. Thus, the π -electrons associated with the Fluorine causes less free charge carriers to interact with the phonons and hence changing the metallic properties of the SWCNT to semiconductor by the doping process. From the graphs obtained, the ratio of hypersound absorption in SWCNT to F-CNT at T = 45 K is Γ SWCNT Γ F − CNT ≈ 29 while at T = 55 K , is Γ SWCNT Γ F − CNT ≈ 9 and at T = 65 K , is Γ SWCNT Γ F − CNT ≈ 2 . Clearly, the ratio decreases as the temperature increases