Globalisation
is serving as a catalyst for global economic transformation. The International
Monetary Fund (IMF) view globalisation as a process by which a persistently
free flow of ideas, people, goods, services and capital leads to the execution
of economic and social objectives.
This
paper seeks to examine the scale of globalisation and its impact on the
Ghanaian economy. The pace at which the government of Ghana is putting in place
policy guidelines to enable businesses maximise the essential benefits and
opportunities there are to overcome the constraints posed by the globalisation
phenomenon.
Globalisation
has come with a soaring rate of free movement of labour, ideas, goods and
capital across national borders that has consistently led to the increase in
transforming economies and societies generally.
Globalisation
is seen as an age old phenomenon dating as far back as 1800. The current wave
of globalisation is a different phenomenon if one considers it against certain factors
such as the development of information and communication technology.
The
development of information and communications technology has made
transportation and communication cheaper in diverse ways – goods and services
are now easy to access.
The
current wave of globalisation can be depicted in the growing number of
cross-border trade in goods, services and capital particularly Foreign Direct
Investment (FDI) which has increased in the post World War I. This however
prompts growth in global trade with production firms located in foreign
countries leading to expansion in the economies of the domestic countries.
According
to an IMF report Ghana and Botswana are among the fastest growing countries in
Africa with an impressive record of sound macroeconomic policies and good
governance which has moved the economies to the low middle income bracket. The
economy of Ghana has the backing of its mineral deposits such as gold and
diamond which are the engine of economic development.
Globalisation
is transforming the world economic outlook and for that matter the lifestyle of
people. The arguments that fathom this concept are copious and overflowing for
countries. The current pace of globalisation with us is unique and the speed
and intensity of political, economic, social and technological forces has
collided to create it. It has renewed wave of people, commerce and capital
throughout the global economy and powered by the creation and transformation of
markets, jobs and industries across the world.
Globalization is a phenomenon that
has overtaken larger part of the world we live in today. A look at the
depths of the most remote village to the world’s biggest cities, the effects of
globalization are crystal clear as anything. However, this paper aims to
address the issues that globalization presents for countries in West Africa;
more specifically, Ghana. To fully understand the situation of Ghana, we
must look at the meaning of globalization and what it represents to Ghana and
the Ghanaian people. Afterwards, we must examine the foreign direct
investment that is flowing into the country and then finally inspect the annual
food production rates, exports of goods and services as well as the GDP growth
rate.
Globalization is a process of
interaction and integration among the people, companies, and governments of
different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world.
The experience gathered from the reversal to
protectionist policies during the interwar period gave an impetus to a new wave
of internationalism after the Second World War. The new wave of trade
liberalization was, however, more selective both in terms of countries
participating and products included. By 1980, developed countries’ barriers to
trade in manufactured goods had been substantially removed, but barriers for
developing countries' agricultural products had been lowered only for those
primary commodities that did not compete with agriculture in the developed
countries. By contrast, most developing countries had erected trade barriers
against imports from each other and from developed countries.
The resulting effect on trade flows was very
uneven. For developed countries, the second wave of globalization was a
spectacular success. Freer trade between them greatly expanded the exchange of
goods. For the first time, international specialization within manufacturing
became important, allowing scale economies to be realized. This helped to drive
up the incomes of the developed countries relative to the rest of the world
(World Bank, 2001e). For developing countries, it perpetuated the North-South
pattern of trade, i.e. the exchange of manufactures for land-intensive primary
commodities, and this impeded them in exploiting their comparative advantage in
labour-intensive manufactures. In addition, as discussed below, many developing
countries adopted a policy approach that was not conducive to a greater
integration into the globalizing world economy.
According to Africa development
bank report, Ghana’s Gross domestic product (GDP) growth decelerated from 14.4%
in 2011 to 7.1% in 2012. The economic growth peak in 2011 was due to the
start-up of oil production in the last quarter of 2010. The growth performance
in 2012 was achieved despite lower cocoa and oil production. Ghana’s
medium-term outlook remains healthy, with projected GDP growth of 8.0% (6.5%
non-oil) in 2013 and 8.7% (8.9% non-oil) in 2014, well above the average annual
growth rate of 6.5% for the period since 2000. Investments in the oil and gas
sectors, public infrastructure and commercial agriculture are expected to drive
this growth.
Improved macroeconomic management
and enduring political stability have not significantly transformed the
structure of Ghana’s economy over time. Mining and construction have sustained
the industrial sector, while manufacturing has been declining as a share of GDP
over the past 20 years. The country needs to develop new, labourintensive
economic sectors such as manufacturing and agro-processing in order to tackle
the employment challenge and provide economic opportunities to rural areas.
This will require coherent public policies to raise agricultural yields,
improve the competitiveness of the economy and overcome land tenure issues.
Decisions on how to spend the country’s increasing oil revenue, projected at
several billion US dollars (USD) over the next two decades, will be crucial to
future economic transformation. The increased oil revenue and foreign direct
investment (FDI) inflows may result in strong upward pressure on the exchange
rate and threaten prospects for industrialisation. In 2010, Ghana enacted a
legal framework for sound management of its oil wealth, and thus far its
programme of hedging oil imports and exports has succeeded in maintaining macroeconomic
stability.
Although
Ghana has been classified as a low middle-income country by the World Bank
since 2010, its development indicators compare poorly with those of most
countries in this category. Ghana has made significant progress towards attaining
the Millennium Development Goals (MDGs). It is likely to attain the MDGs on the
eradication of extreme poverty, universal primary education, promotion of
gender equality, empowerment of women, and combating HIV/AIDS, malaria and
other diseases. Ghana continues to be challenged by slow progress on reduction
of under-5 mortality, improvement of maternal health and environmental
sustainability.
According to a World Bank report, Ghana’s economy
is growing ahead of the average for the Africa region, with gross domestic
product (GDP) growth at eight percent in 2010, 14.4% in 2011, and is expected
to be around seven percent for 2012, prompted by strong cocoa production,
construction and transport, continued increased gold output and the
commercialization of oil. Inflation eased to 8.8% in December on the back of
declining food price inflation, but producer price inflation is at 17%.
In the period 2009-2011, Foreign Direct
Investment (FDI) flowed in to the tune of US$3 billion per year. The current
account deficit moved between seven and eight percent of GDP in the 2009-2010
period, but rose to 9.8% of GDP in 2011 and is expected rise further in 2012.
Source:
http://www.worldbank.org/en/country/ghana/overview
There
a lot a of controversies surrounding the term globalisation, however,
Proponents of the concept argue that it allows deprived countries and their
citizens to achieve economical development and raise standards of living.
Opponents of globalisation posit otherwise that the creation of an unfettered
international liberal market system has benefited multinational corporations in
the Western world to the detriment of local enterprises, local cultures, and
common people. Resistance to globalisation has therefore taken shape both at a
popular and at a governmental level as people and governments try to manage the
flow of capital, labour, goods, and ideas that constitute the current wave of
globalisation.
In
conclusion it must be emphasised that Ghana’s economic development has
benefited in a large part due to internalisation and free trade system. The
current wave of globalisation where oil companies have sunk their equipment and
other resources has seen the whole nation smiling because the future looks
bright for a nation discovering oil at this time.
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