This Selected Issues paper discusses growth strategy for Ghana. Ghana has achieved impressive development gains over the last decades, with rising incomes, lower poverty, and better health, education, and gender outcomes. However, growth has recently become less inclusive, with high inequality and slower poverty reduction. In order to address these challenges, the authorities are pursuing a “Ghana beyond Aid” development strategy centered around agricultural modernization and export-led industrialization. Accelerating productivity growth calls for fostering competition, improving the business environment, strengthening human capital, taking advantage of growing regional markets and industrial policies that prioritize sectors that can export and innovate and where Ghana could achieve economies of scale. Consistent and predictable government policies can help increase long-term investment and improve public spending effectiveness. A key lesson from growth accelerations in other countries is that it is crucial to achieve economies of scale. In most cases, rapid economic growth required achieving export success in specific sectors.
The relevance of recording and assessing countries’ capital flow management measures is
well-recognized, but very few studies have focused on low-income developing countries
(LIDCs). A key constraint is the lack of an appropriate index to measure the openness of
capital account and its change over time. This paper fills the gap by constructing a de jure
index based on information contained in the IMF’s Annual Report on Exchange
Arrangements and Exchange Restrictions. It provides an aggregate index to capture the
overall openness of the capital account, and also provides a breakdown of openness for
various subcategories of capital flows. The new database covers 164 countries with
information on 12 types of asset categories over the period 1996–2013. The index provides
the largest coverage of LIDCs among all existing indices and also provides granularity on
openness across asset types, direction of flows and residency. The paper examines the link
between de jure capital account openness with de facto capital flows and outlines potential
applications of this database.
Mr. Emre Alper, Mr. R. Armando Morales, and Mr. Fan Yang
This paper analyzes the degree to which volatility in interbank interest rates leads to
volatility in financial instruments with longer maturities (e.g., T-bills) in Kenya since
2012, year in which the monetary policy framework switched to a forward-looking
approach, relative to seven other inflation targeting (IT) countries (Ghana, Hungary,
Poland, South Africa, Sweden, Thailand, and Uganda). Kenya shows strong volatility
transmission and high persistence similar to other countries in transition to a more
forward-looking monetary policy framework. These results emphasize the importance of a
strong commitment to an interbank rate as an operational target and suggest that the
central bank could reduce uncertainty in short-term yields significantly by smoothing out
the overnight interest rates around the policy rate.
The IMF Research Bulletin includes listings of recent IMF Working Papers and Staff Discussion Notes. The research summaries in this issue are “Explaining the Recent Slump in Investment” (Mathieu Bussiere, Laurent Ferrara, and Juliana Milovich) and “The Quest for Stability in the Housing Markets” (Hites Ahir). The Q&A column reviews “Seven Questions on Estimating Monetary Transmission Mechanism in Low-Income Countries” (Bin Grace Li, Christopher Adam, and Andrew Berg). Also included in this issue are updates on the IMF’s official journal, the IMF Economic Review, and recommended readings from IMF Publications.
This paper reviews the evidence on how households in Sub-Saharan Africa segment along consumption, income and earning dimensions relevant for quantitative macroeconomic policy models which incorporate heterogeneity. Key findings include the importance of home-grown food in the income and consumption of house-holds well up the income distribution, the lack of formal financial inclusion for all but the richest households, and the importance of non-wage income. These stylized facts suggest that an externally-generated macroeconomic shock and the short-term policy response would mainly affect the behavior and welfare of these richer urban households, who are also more likely to have the means to cope. Middle class and poor households, especially in rural areas, should be insulated from these external shocks but vulnerable to a wide range of structural factors in the economy as well as idiosyncratic shocks.