The World Bank has expressed doubts over Ghana’s desire to double its GDP per capita, which is currently around US$1500, in the next six years, saying, it would require per capita growth rates of around 9 percent.
The World Bank said historical growth rates since the 1990s have, on average, never reached rates higher than 5 percent (over the 2005-2012 period).
The bank’s Long-Term Growth Model suggests that per capita growth rates, if they continue the trends observed since the 1990s, will be around 1.7 to 2.5 percent over the next two to three decades.
The bank makes the observation in its Ghana Systematic Country Diagnostic (GSCD) – a new strategy it has developed to identify the most important challenges and opportunities a country faces in ending extreme poverty and boosting shared prosperity.
To maintain high levels of GDP per capita growth, it said, Ghana needs to strengthen contributions of human capital and total-factor productivity (TFP) — which is the portion of output not explained by traditionally measured inputs of labour and capital used in production — to the growth process.
Investment levels, both private and public, can only realistically reach 25 to 30 percent of GDP in the long run, since the historical average from the 1990s has been between 20 and 25 percent, the World Bank said. “These levels of investment, however, are insufficient to increase per capita growth in the long-term beyond the 1.7 to 2.5 percent range,” it said.
To reverse the trend, it said, growth drivers beyond investment need to be found — adding that “efforts to raise the contributions of TFP and human capital to the growth process are shown to have the highest impact on growth in the long-run”.