The Economy and History of Ghana

Posted: February 16, 2013 in All Posts, Ghana

by Jamin Shih

Crucial to the identities of most countries are their economic profiles and historical contexts. The economic guidelines for countries determines some of their social structure and class mobility while their history affects much of the way countries interact with others and what decisions they make. Ghana is no different. The economy and history of Ghana profoundly affects how the country views and interacts with the world.

According to the 2013 index, Ghana has the 77th freest economy in the world. What this means is its economic freedom score, which is a compilation of measurements of labor freedom, monetary freedom, property rights, trade freedom, and more, has improved over the years. This is particularly important to the way that Tony Judt views world economics in the scholarly book Ill Fares the Land. The crux of the argument in the book is that economic inequality leads to various social ills, such as crime and mental illness. So while Ghana indeed has made some admirable gains in economic freedom, there is still a troublesome income gap that must be dealt with. By attempting to climb the ladder in terms of a free economy, Ghana will hopefully have fewer social issues to deal with.

Part of this economic success is Ghana’s richness in natural resources. Ghana has an ample supply of such resources like diamonds, gold, oil, and cocoa, all in high demand. Because of this, its economic sector is one of the most developed in Africa. That being said, there is a public deficit of roughly 40% of domestic output.

Trade tariffs are relatively high compared to other countries, and they stand at roughly 8.6%. This high tax prevents trade from being as frequent and efficient as may be preferable. Going hand in hand with these problems are some of the downfalls of the regulatory system of Ghana. According to heritage.org, starting a business takes almost a year’s worth of bureaucratic preparation. In order to get the permits necessary to successfully operate a new business, prep time of 218 days and fees totaling over four times the average annual income must be taken into account. Predictably, Ghana does not score well on business, labor, and monetary freedom.

In terms of historical context, Ghana actually was known first as The Golden Coast when the Portuguese first reached their shores, astonished at the abundance of gold present in the country. Rulers of Ghana were traditionally known for being quite wealthy in gold while governing what has traditionally been a surprisingly homogenous population in terms of religious beliefs. The Ghana of the past is not the Ghana of our modern world, however. At the time, many of the areas that constitute present-day Ghana were separate entities with separate rulers that later became the conglomerate that is Ghana.

While gold was the main attractor for Europeans to come to the Golden Coast, it was the slave trade that truly increased international interactions. During this period after the 1500s, conflict surrounded the several factions of Europeans attempting to take control of the slave trade. The Portuguese finally left the coast in 1642 but that was not the end of Ghana’s problems with colonization. What followed was a time of European competition over Ghana and its resources. Europeans built forts and castles, which were fought over and switched sides. In essence, Ghana was caught in the middle of European colonialism in its own territory.

Ghana was colonized by Great Britain in the 19th century, and the country helped Britain in both World Wars. However, eventually the notion of independence became very politically important to many people in Ghana. It finally won its independence from Britain in 1957, making it the very first African country to do so.

In terms of relationship with the United Nations, Ghana is a part of, and one of the founders of, what is called the Group of 77, which is an entity in the United Nations that seeks to help developing countries achieve what is in their self-interest during United Nations deliberation. Ghana was a part of developing this group in 1964 with the knowledge that it can be difficult to have the influence to help many developing countries without working together. It has since expanded its membership.

Ghana has a rich economic and historical background that is constantly affecting its future. This barely scratches the surface of what there is to know about this rich country. The past greatly affects the future, and how Ghana has dealt with its mineral wealth, slave history, and economic and colonial past will influence how it interacts with a globalizing world in the future.

 

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