Globalization in the Context of Ghana Development Prospects - Report Example

Due Globalization in the Context of Ghana Development Prospects Introduction René de Chateaubriand, a French critic, peeped into the future with a visionary perspective in 1841—nearly at the end of his life—and wrote: “The future to which chateaubriand looks forward to is one shaped by science and new technologies of transport and communication, a future where steam engines (he wrote) power telegraphy and railway connections, a future where distance will be no more of an impediment to movement, and a future where commodities as well as ideas possesses wings” (Ofosu par 11). His writing was an indication of a global process cognizant of speed as a key transformational element via the transfer of information and ideas. Centuries after the prediction, Chateaubriand’s vision lives on. The politics of globalization in the 21st century not only engenders economic and technological perceptive mechanics, but also encompasses nation-state relations with a principal focus on sharable values and ideas via global institutions such as the IMF (International Monetary Fund), cable news (CNN), etcetera (Chabal par 6-11). In the words of a German philosopher Herder, “we are in a divested world policed by all in a closely knit web of closer trading ties, opulence, and above all via transferable cultural dynamics” (Ofusu par 17). Based on accounts of common understanding among scholars, the politics of globalization defines to a greater extent “the process that eases restrictions on movement in a borderless world economy” (Scholte 15-17). Who are the winners and losers in this new arrangement? This report analyses the effects of the politics of globalization on Ghana’s competitive standing on the global arena via an in-depth conceptual interrogation of its foreign policy, its adjustments to the G-Zero world and the role of identity and diasporic politics on its economic development. Foreign policy of Ghana Ghana’s story, like many African and South American countries, is a story characterized by a mixed fortune of charismatic leadership with a determination to bring economic prosperity within their soil. With a dream of development prospects to the western standards, the original desire of Ghana’s leadership after independence was a state of parity in a record time of ten years under ideological stewardship of Kwame Nkrumah. Even though development was never fully achieved within the period, international political influences remained fully ingrained in the country’s undertakings. From independence upfront, Ghana adopted foreign policy principles and ideals of nonalignment and Pan-Africanism enunciated by Kwame Nkrumah’s tenure. Accordingly, the adoption of nonalignment stand was a counter-strategy measure against the infiltration of antagonistic policies perpetuated by alliances of both the East and West power blocs. On the other end, Pan-Africanism was a cooperative visionary policy aimed at liberating the continent from Western colonialism and uniting it for a more consolidated economic and political independence (Ofusu par 33). The country’s active participation in the various organizations such as the United Nations, African Union, and ECOWAS is a clear indication of its commitment to the maintenance of friendly relations and cooperation on the basis of mutual respect and noninterference from other countries irrespective of ideological differences. Taking colonialism off their shoulders, the post-independence national reconstruction placed Ghana as a middle-income country by the 1960s, with its citizenry enjoying relatively stable socio-economic standards of living. As fate would have it, political instability coupled with economic mismanagement by the military juntas in the 1970s eroded the positive economic gains at independence, eventually plunging the country into severe socio-economic crisis. As the wee hours of the 1970s approached, the country’s gross domestic product’s declining rate was alarming, pushing every sector to a grinding halt (Nikoi 112). Unemployment, inflation and the general cost of living were biting hard, not just hard but to the masses. It was against this backdrop that Ft. Lt. J.J. Rawlings led the June 4th 1979 uprising with a view to clean up the Ghanaian socio-economic system and restore justice to the masses. Ghana held its first democratic elections the same year, and Limann was voted into office, only to be ousted in 1981 by Rawlings and his men accusing the government of inaction against the plight of the masses (Shillington 82). After nearly a decade of plunder leaving behind very limited resources, Rawlings’ forced administration declared revolution pledging good governance, urging support for a ”just, transformed” Ghanaian society. The transformation process aimed at sanitizing the distribution of resources between the have and the have-nots. In particular, the project of social transformation targeted not only meeting basic needs (food, clothing and shelter, etcetera) but also raising the quality of lives of the suffering masses (Nikoi 60-62). There is a general consensus that globalization has created a number of winners in various parts of the world while concurrently contributing to deprivations in those areas. Indeed, it is true that globalization knows not equality; it empowers more those already empowered through their access to capital and resources while concurrently disempowering those on the receiving end (Hay and Watson 149-161). It is not surprising therefore, that losers and winners from process of globalization are represented through most of the perspectives; the NIE (Natural, Inevitable and Evolutionary), the SPG (Socially and Politically Generated), the Outliers or Feminist Economics perspective, Islamic Economics, and Asian Values perspective, all have their fair share in the socio-political and economic distribution of wealth in Ghana. While rational choices have been utilized quite often to drive economic fortunes, opportunities, merit and corruption have been factors of success in one way or another. However, gender parity still lies far below the mark. Adjustment to the G-Zero Worlds At independence in 1957, Ghana was a middle-income nation by today’s standards in terms of per capita incomes, placing it at the top among African countries. The world’s largest producer of cocoa then, the country had external reserves equivalent to three years’ of imports (Tsikata 9). Soon after independence, pricing of the most treasured commodity began a downward trend yet the government’s massive investments continued even with the shrinking revenues. Instead of sensing danger of economic collapse and subsequently limit its spending strictly to public goods, the government became even more heavily involved in central planning from the year 1961 onwards. That same year, it granted the Cocoa Managing Board (CMB) monopoly rights on all purchases of cocoa from farmers, replacing the network of private traders, brokers and other middlemen that were hitherto in direct contact with farmers. Consequently, production and marketing costs shot up and profits squeezed initiating a fast falling government revenue string. Faced with the rising costs of imports for public investment, the current account tilted to the negative worsening the prospects of foreign exchange reserves. Armed with quick fixes, foreign exchange controls were introduced, and large state-owned enterprises (SOEs) created for mass production to substitute imports. In 1964, the obvious happened; the world cocoa prices collapsed leaving the government with no option other than printing money to meet its expenses (Leith and Söderling 66). As inflation trickled down to the common man, the hell broke loose; real wages fell, government lost support and a coup in that order. Until 1983 under the leadership of Flight-Lieutenant Jerry J. Rawlings, Ghana knew not the meaning of a G-Zero World. Lessons learnt, the government came back to its feet and with the help of the help of the IMF and the World Bank initiated Economic Recovery program touching on economic stabilization and market reform. Of central importance to the economic recovery was the exchange rate policy among other liberalization policies to open the country as an investment destination to external firms-mostly the Multinational Corporations. Having been overvalued by more than 1000 percent, a series of devaluation measures of the country’s currency-cedi followed (Leechor 159). With a determined exchange rate policy and a weakening fiscal position, especially after the 1992 democratic elections, real exchange rate gradually took shape stimulating exports once again. By 2002, imports had rebounded with the zero rated goods accounting for approximately 13.5 percent of all imports (Haizel et al. 42). The government has since withdrawn support for SOEs taking a more hands-off approach in the management of the economy, deviating thoroughly from the Beijing Consensus development model that largely antagonize the IMF/WB supported friendly market dynamics (Leith and Söderling 79). With relatively minor re-modifications in trade policy since 1992, the current policy environment sharply contrasts the prevailing conditions prior to 1983. With transformation processes still on course, the latest 2012-2013 Global Competitive Index (GCI) ranks Ghana among the best performing countries in African in term of institutional governance with promising infrastructural development by regional standards. With almost a quarter century of relatively sound management, Ghanas economy is lifted from the doldrums; the business environment has become attractive and poverty levels significantly reduced. Agriculture is back on track accounting for roughly one-quarter of GDP. Gold, cocoa production and remittances are major foreign exchange earners today. The country has had a sustained growth averaging over 5 percent since 2001, touching on the 6 percent in 2005-2006. The country has increased access to education, healthcare and land ownership (World Bank, 2008). With fresh oil reserves estimates close to 700 million barrels, expectations are high, particularly on economic growth.  Ghanaian Politics and Diaspora Groups The diasporic groups constitute a major investment block in the Ghanaian economy. Over the years, this group has been a major national resource, making tangible impact on national development through investment of their remittances, expatriation of skills back home and through transmission of cultural influences and values copied abroad. Indeed, the benefits could be considerable as returnees do not only bring home skills and capital, but also carry with them transformed attitudes that are instrumental in revolutionizing work ethics and entrepreneurial code of conducts beneficial to the economy’s growth prospects (Robinson 7). Even though those coming back are few in number, those already back play fundamental catalytic roles in certain key sectors such as information technology, social advocacy and in the field of academia. The current state of Ghanaian economy relies largely on foreign direct investment. The high corporate revenue taxes collected by the government have been a great deal of help to the economy, especially after 2008 global financial meltdown. Although mild due to the limited exposure of its financial market to the world market, the impact via the sky rocketing prices of crude oil affected the country’s economy to some degree. It is an obvious fact that Ghana is still in the process of finding better solutions to the puzzle of economic development that has impeded its growth momentum over the years. Nonetheless, the country is much better-off compared to many developing countries, particularly given its past predicaments with leadership errors. Work cited Chabal Patrick. Africa in the age of globalization. Africa security review 10 (2) 2001. Print. Haizel, J.E.B., K. Yahya, G.K. Fynn, B.Y. Ntim and J.E. Bannerman. Tariff Review of Ghana. London: Undertaken for DFID, 2002.print. Hay, C. and Watson, M. Labours Economic Policy: Studiously Courting Competence. In The Impact of New Labour. Ed. Taylor, G.R. Basingstoke: Macmillan Press, 1999. Print. Leechor, C. “Ghana: Frontrunner in Adjustment.” In Adjustment in Africa: Lessons from country case studies. Ed. I. Husain and R. Faruqee. Washington, DC.: world bank, 1994. Print. Leith, J.C. and L. Söderling. Ghana: Long Term Growth, Atrophy, and Recovery.” The Nordic African Institute. Research Report No. 125. 2003. Print. Nikoi, Gloria. Gender and development. 1993 Kwame Nkrumah Memorial Lectures. Accra: Buck Press, 1998. Print. Ofosu, Victor. The Effect Of Globalisation On Ghana. Federation of Universal Rights, Sep. 2010. Web. 20 September 2012. Robinson, Brooks A. Optimistic Ghanaians ReturnHome and Make a Difference. Accra: Unpublished Ms., 2004. Print. Scholte, Jan Aart. Globalization: A Critical Introduction. London: Macmillan, 2000. Print. Shillington, Kevin. Ghana and the Rawlings Factor. London: Macmiillan & Co., 1992. Print. Tsikata, Yvonne. “Aid and Reform in Ghana: Country Case Study in World Bank, Aid. Effectiveness Research. Washington DC: World Bank, 1999. Print. World Bank. Country Brief: Ghana. Washington D.C.: World Bank, 2008. Print. Read More