For 200 years, we’ve been building a gigantic worldwide machine driving relentless economic growth. What we recognise evermore is that it is not fulfilling its promise of prosperity.
The dominant economic models today almost exclusively emphasise the virtues of growth, ignoring the resultant negative outcomes of power asymmetry, social inequality and the destruction of the environment.
This depletion of the natural environment and our climate, alongside growing socioeconomic inequality, necessitates a rethink of the economic model employed for our shared future.
What is a transformative economy?
The core element of the theme for this edition of the Ishmael Yamson & Associates Business Roundtable is building a transformative economy. This aim is compelling because a transformative economy provides space for us to discuss new economic approaches and concepts that catalyse the re-invention of society. As Joseph Stiglitz put it, “Development is about transforming the lives of people, not just transforming economies.”
For our teeming youth, building a transformative economy marked by a balanced sharing of responsibilities in a transparent decision-making process, will raise the quality of all forms of human capital and facilitate the moving of enabling resources from lower- to higher-productivity sectors. The transformative economy we envision will have four important themes.
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First, the transformative economy will be a bottom-up planning process for transforming lives and livelihoods that involves all interests in sketching out the impartial allocation of national resources to maximise shared economic benefits.
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Second, is the participation of all the key stakeholders in a hands-on decision-making culture where, as a society, we define how we want to live, prosper and secure the socioeconomic future together.
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Third, it fosters a practical path to the structural change and long-term sustainability of the economy and the environment in ways that those who benefit from the status quo and political elites may be unable or unwilling to entertain by themselves. Typically, that shift lifts the levels and the growth rate of productivity within a broad spectrum of sub-sectors across the economy. The shift also raises the quality of our environment and climate.
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Last, the more balanced livelihoods for citizens in a transformative economy include more economic inclusivity and low levels of income disparity and inequality.
Why is it important for Ghana to develop a transformative economy?
In building a transformative economy, the key stakeholders must begin with a clear understanding of the nature of the new economy that the State intends to develop to address the structural weaknesses in the current economy. The pursuit is important for three reasons.
First, it guides investments in human capital designed to improve the lives of most citizens to generate resilient, smart, sustainable, and balanced growth.
Second, the new economic model expands opportunities through
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the greater global integration,
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the introduction of modern technologies across the key sectors of the economy,
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increased investments and economic activity are driven by macroeconomic stability, and
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a more responsive financial sector supporting innovation and business investments.
Third, the newly created transformative economy should deliver long-term inclusive growth underpinned by macro and fiscal stability, better management of the natural and human resource endowments and more effective revenue mobilisation.
How should we set about creating the highly adaptive socioeconomic models needed to make the transformative economic model sustainable?
The key benefit of a transformative economy is that it is a circular, robust, internally resilient, self-sustaining domestic economy. To attain this quality of an economy requires us to settle a few issues, including:
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The Big Jobs Debate: The average Ghanaian only possesses about 9-10 years of education and does not have the high skills that the manufacturing and service sectors demand. Little wonder then, that we have not been able to develop the very relevant middle economy, light manufacturing, the agri-business value chain and allied science, technology and innovation, and industrial sub-sectors. Consequently, we have failed to pull young people into the high-end productive sectors even though the economy has consistently grown at levels above the average rates in Africa.
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The Benchmarking and GDP Growth Debate: We need clarity about what we are trying to solve regarding GDP growth. The current focus on driving production and nominal growth without a step-change in the architecture, efficiency and productivity of agriculture and the agribusiness value chain cannot sustainably support industry nor promote long term success. Today, when we debate the performance of Governments and the economy, we are forced to benchmark against countries and economies with poorer human and natural resource endowments rather than aiming at overtaking more successful economies.
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Corruption Debate: The repositioning of the economy has to include an end to rampant corruption across the three arms of Government and the Civil and Public Services. The shift must also include establishing high professional standards, robust independence and effective performance in scrutinising the financial and socio-economic decision-making by the Executive as the hallmarks of the Parliament and Judicial arms.
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Public-Private Sector Collaboration and the Orientation of the Political Economy: It is important to clarify the coordinated approach for identifying and supporting success stories, particularly in agribusiness, industry and export value chains and the political construct which will underpin economic growth and prosperity.
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Regional Trade Links: ECOWAS and now, AfCFTA, together imply a semblance of opportunities. Yet, meaningful trade links are few and the real ambition of the Government to pursue these opportunities remains opaque. Nonetheless, a transformative economy will resolve the right things (electricity, regulations, exchange rates, hard and soft infrastructure etc) and make it possible for Enterprise Ghana to build sustainable, vibrant industrial bases that leverage the population and economy of West Africa and Africa.
