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Globalization, Trade and Poverty in Ghana
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Th e persistence of poverty in many developing countries, especially in Sub-Saharan Africa
(SSA), in the face of increased globalisation and rapid trade liberalisation during the past two
decades has inspired considerable debate on the impact of globalisation, in general, and trade
liberalisation, in particular, on poverty. Th e standard argument, based on the Stolper-Samuelson
theorem, is that global trade liberalisation would lead to a rise in the incomes of unskilled labour
in developing countries. In other words, since developing countries are more likely to have a
comparative advantage in producing unskilled labour-intensive goods, one would expect trade
reforms in these countries to be inherently pro-poor (Krueger, 1983; Bhagwati and Srinivasan
2002; Bhagwati, 2004; Harrison, 2005). However, the experiences of many developing countries,
particularly in SSA, have been disappointing and in many cases poverty has increased following
trade liberalisation (Easterly, 2001). It is estimated that more than 1 billion people still live in
extreme poverty (based on the US$1 per day poverty line), and half the world’s population lives
on less than US$2 a day.
In Ghana, as in many other SSA countries, poverty remains the fundamental problem
confronting policy makers in the new millennium as highlighted in the Ghana Poverty
Reduction Strategy (Government of Ghana, 2003) and Vision 2020: Th e First Medium-Term
Development Plan (National Development Planning Commission,1977). Yet, between 1991
and 2006, the headcount index of poverty fell by 23.2 percentage points with the proportion of
the population living below the national poverty line falling from 51.7% in 1991/92 to 28.5% in
2005/06. Poverty had fallen in the countryside as well as in the towns, though progress had been
more rapid in rural areas. Research at ISSER (2006), suggests that this positive trend is likely to
continue if Ghana maintains the average growth rates of the last few years making it likely that a
number of targets contained in the Growth and Poverty Reduction Strategy II (GPRS2) will be
achieved. Th is optimism is, however, tempered by the fact that while poverty declined, inequality
increased signifi cantly during the same period. Th e Gini index for consumption per equivalent
adult increased from 0.353 in 1991/92 to 0.378 in 1998/99 and fi nally 0.394 in 2005/06.
Charles Ackah and Ernest Aryeetey - Personal Name
1st Edition
978-9988-647-36-0
NONE
Globalization, Trade and Poverty in Ghana
Management
English
International Development Research Centre
2012
Canada
1-257
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