American Economist Calls for More Domestic Investments
An American economist, Dr. Peter M. Lewis has called for credible commitment on the part of the government to implement policies and deliver on its promises to propel Ghana’s economic growth.
He said although the country had good macro-economic policies, the most important issue was not the policy regime but how to improve the institutional regime to ensure growth.
He urged the government to encourage more domestic investment, arguing that foreign investment was only an adjunct to economic growth.
Dr. Lewis, an associate professor at the School of American University, USA, was leading a discussion on the topic, “Will Ghana Become a Middle Income Country? Politics of Growth”.
It was organized by the Ghana Center for Democratic Development (CDD-Ghana) in Accra on Thursday.
Dr. Lewis said the county had a good policy regime but, contrary to expectation, a slow economic growth, a situation he described as the Ghanaian paradox”.
The country’s economic growth rate for last year was 5.2 per cent of GDP, according to the 2004 Budget Statement and Economic Policy, which has also targeted the same growth rate for this year. Economists, and, indeed, the Millennium Development Goals, have prescribed a necessary eight percent growth rate to propel the country to the desired middle income bracket.
Dr. Lewis observed that although Ghana’s policy regime had been carefully thought over, there was lack of political commitment to execute the set targets.
Lack of such political commitment, he said, discouraged local and foreign direct investments, adding that lack of capital formation was also responsible for the low investment rate in the country.
Dr. Lewis further identified low transaction cost and predictability of the economy as very critical for long-term investment and pointed out that individuals and institutions would not invest if they were afraid of expropriation.
He said the difficulty in capital mobility, through the use of credit cards and travellers’ cheques, was a major impediment tot investment promotion.
Dr. Lewis advised the government to invest more in agriculture and agro industries, as well as provide extension services for farmers.
On corruption, the American economist said the canker was not incompatible with growth and development, arguing that what was necessary was for people to perform and deliver on expectations.
He said there was corruption everywhere and alluded to the fact that the government’s zero tolerance for corruption had not been able to eliminate the canker.
An economic consultant, Professor Cletus Dordunoo, held a different view on corruption as expressed by Dr. Lewis.
In his opinion, corruption was the result of lack of accountability, stressing that that must not be tolerated.
Professor Dordunoo said economic policies in the country had failed because of poor implementation and pointed out that policies were not just about objectives but implementation.
The Associate Director of CDD-Ghana, Dr. Baffour Agyeman-Duah, said it was important to make education purposeful to address the needs of the country. He, therefore, called on the universities to respond tot the challenge.
He said the country’s education and development were running in parallel lines and they needed to be addressed.
Source: Daily Graphic