Globalization, Trade and Poverty in Ghana

The persistence of poverty in many developing countries, especially in Sub-Saharan Africa, 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.

In Ghana, as in many other African countries, poverty remains the fundamental problem confronting policy makers in the new millennium as highlighted in the Ghana Poverty Reduction Strategy. 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. This optimism is, however, tempered by the fact that while poverty declined, inequality increased significantly during the same period. Large reductions in the incidence of poverty have occurred among private sector employees in both the formal and informal sectors, and among public sector wage employees, but export farmers have experienced the largest reduction in consumption poverty. Poverty reduction among the large numbers of food crop farmers, on the other hand, has been modest. Reductions in the incidence of poverty over the period have been smaller also for the non-farm self employed and informal sector wage employees. A recent publication by the World Bank suggests that had there been no change in inequality, the reduction in poverty would have reached 27.5 percentage points, so that Ghana would have achieved the Millenium Development Goal (MDG) target of reducing poverty by half in relation to its level of 1991/92.

This book is one response to the challenge posed by the paucity of recent empirical evidence on the poverty and distributional impacts of trade policy reform in Ghana. The main objective of the study is to contribute to an understanding of the poverty and distributional impact of trade policy reform in Ghana by analyzing how trade liberalisation affects the well-being of households and in particular, if the outcome it generates is pro-poor, with particular interest in the gender-differentiated impact.