Economic development has to occur after a period of sustained economic growth. It is therefore the growth in total economic output accompanied by changes in the structure of the economy. There are many barriers to economic development in Ghana. Eight of them are discussed below: First and foremost, Ghana like most developing countries is enriched with natural resources or deposits but the human capital is not able to transform them to achieve rapid economic growth and development.
For economic development to take off in any country, the human resource of the country should be in a position to harness the country’s endowed natural resources to fuel this economic development process.
The skills and requisite know how that the human capital of the country requires to accelerate growth is not enough. The mining sector in Ghana suffers the problem of human capital. Most of the experts are foreigners and the remit their incomes back to their countries to the detriment of Ghana.
If all the remuneration of these expatriate workers were given to the indigenous people the impart would be great on economic growth and development.
The oil industry is another sector worth mentioning. The technical know how needed for exploration and drilling of the crude oil is lacking in the country. Foreign experts are therefore employed instead of the indigenous people. The chunk of the revenue realized from this sector moves out of the country thereby retarding the economic development of the country. Another barrier to economic growth and development is low capital accumulation. According to the Ghana Statistical Service, it is only about 3% of the total population who save monies with the banks.
This means about 97% of the total population keep their monies out of the banks. In a country where most of the money in the system are with individuals, the financial institutions find it difficult to get money to lend to people who need it for business purposes. The habit of keeping money at home rather than the bank can also bring about inflation in the country which is a negative signal for economic growth and development. Moreover, people who are in government and for that matter have access to huge sums of money usually do their savings outside the country because of fear.
This is what is termed capital flight. Many government officials find it convenient to have their savings accounts outside the country in order not to stand the chance of losing everything should any political instability occurs. Many expatriates who work in the country also remit their earnings back into their countries of origin instead of saving at least part of it here for the business community to get access to capital so that they can expand their businesses to enhance growth. Also, lack of technological advancement is a barrier to economic growth and development in Ghana.
Many countries that are experiencing rapid economic growth are technologically inclined. For instance, South Korea, China, Malaysia and Singapore are developing rapidly due to their advancement in technology. Ghana as a country still relies on traditional methods of doing things, example, using cutlasses and hoes in farming instead of tractors, ploughs and combined harvesters. All these traditional ways of doing things retard economic development. Industrialization which is the backbone of any rapid economic growth is not pursued much in the country mostly because Ghana lacks the required technology to support it.
It is the industrial sector that will increase certain macro economic indicators like employment levels, exports, Gross Domestic Product (GDP) as well as Per Capita Income. All these indicators are very low in the country because we lack the technology required to develop the industrial sector. This has created a gap between the Agricultural sector and the services sector of Ghana. In fact, this is a great barrier to economic growth and development. In addition, inadequate social and economic infrastructure serves as a hindrance to rapid economic growth and development in Ghana.
Many farmers incur post-harvest losses because of unavailability of motorable roads to convey their produce to the market centres for sale. Most perishable crops like tomatoes and other vegetables get rotten in the farms because vehicles are not able to get to the farm centres due to the bad nature of our roads. Moreover, most roads linking cities and towns are in a deplorable state and that matter transportation of goods and services in Ghana does not go on smoothly. The rail transport which is one of the pillars of transportation in developed economies is almost unavailable in the country.
A country that lacks good transportation system like Ghana will surely suffer from retardation in economic growth. The supply of social amenities like potable water, electricity, etc is also inadequate in the country. For a country to experience economic growth and development, its people should have access to good drinking water, constant supply of electricity and quality healthcare but these social amenities are woefully inadequate in Ghana. Lack of potable water brings about water borne diseases to the citizens which makes them spend most of their time at hospitals seeking for medical treatment instead of engaging in economic activities.
All these lapses bring about reduction in productivity. Intermittent power fluctuations also has a negative on the general output of the of the country since many production activities depend on electricity. Socio-cultural and institutional factors is another barrier to economic growth and development in Ghana. Most of our cultural practices are outmoded and therefore hindrance to economic growth of the country. Education is the key to success in this modern world but most communities flown on girl-child education. These girls grow up to become liabilities to society rather than assets.
Cultural practices like the trokosi system and many others do not in any way promote economic growth in Ghana. They deny innocent people their rights to education and quality lives so the victims grow up to become unproductive citizens in the country. There are also a lot of loop holes in our institutional framework and therefore individual citizens take advantage of that to enrich themselves through bribery and corruption. Those who are put in charge of the national coffers use it for their selfish gains rather than pursuing the national interest which will bring about economic growth and development.
Our society also regards riches than knowledge therefore people use all dubious means to break into the national coffers to enrich themselves for prestige. All these are done at the expense of the country thereby retarding its growth and economic development. Also, our educational system is one of the barriers to economic growth and development of the country. Most of the things taught in our schools are outdated and for that matter have little or no impart on our economic fortunes. Many people complete universities and remain unemployed because they do not fit into any sector of the economy.
Technical education which brings about growth at the industrial sector is neglected in the country. Because of this most people prefer liberal education to technical. As a result, the required technical skills needed to grow our industries rapidly are lacking among the human resource of the country. Another barrier worth mentioning is unemployment and under employment. The trend over the years shows that unemployment rates have been increasing. This is mainly because of the gap created by lack of industries between agriculture and services sectors. Many people within the labour force are unemployed or nder employed because there are no jobs available for them to do in the country. This can also be attributed to high population growth in the country. According to the Ghana Statistical Service report on population census in 2000 and 2010, the average growth rate within the ten years is around 28. 1% which is very high. High population growth without corresponding growth and expansion in the economy result in unemployment and under employment. High unemployment levels can bring about high dependency ratio which is a hindrance to economic growth and development.
The small market size of the country also impedes economic growth and development of the country. Establishment of a factory requires a survey to find the market size of the place you are going to build the factory. Looking at Ghana’s population of about 24,223,431 as compared to that of other countries in the sub-region like Nigeria which has a population of over 150 million, potential investors will prefer investing in Nigeria than has a larger market than Ghana. Because of this, most large establishments that will propel the wheels of economic growth and development elude the country as a result of small market size.
Cite this Barriers to Economic Development in Ghana
Barriers to Economic Development in Ghana. (2016, Nov 14). Retrieved from https://graduateway.com/barriers-to-economic-development-in-ghana/