Ghana’s non-traditional export sector: expectations, achievements and policy issues

Geoforum 31 (2000) 355±370

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GhanaÕs non-traditional export sector: expectations, achievements and policy issuesq Edward Addo a,*, Robert Marshall b b

a Department of Geography, University of Regina, Regina, Saskatchewan, Canada S4S 0A2 Department of Town and Regional Planning, The University of Sheeld, Sheeld S10 2TN, UK

Received 17 March 1998; in revised form 15 September 1999

Abstract The past 14 years in Ghana have been characterized by frantic government e€orts to resuscitate the economy through structural reforms recommended and supported by donor agencies, particularly the World Bank and the International Monetary Fund (IMF). The Non-traditional Export Sector (NTES) has been accorded unparalleled attention in economic development due to persistent deterioration in the terms of trade for the countryÕs major/traditional exports ± cocoa, timber, and minerals (gold, diamond, bauxite and manganese). This paper discusses the planning strategies, expectations, and policy dilemmas of institutions supporting the export diversi®cation drive, and analyzes the performance of the NTES in terms of export earnings. While the expectations of the government and the Ghana Export Promotion Council (GEPC) have been quite high, in relative terms the achievements of the NTES have been moderate, a situation which demands more visionary strategic planning and policy formulation. Ó 2000 Elsevier Science Ltd. All rights reserved. Keywords: Ghana; Development; Planning; Policy; International trade; Structural adjustment

1. Introduction The economies of most developing countries were integrated into the international trade system during European colonization. Export of primary products and import of manufactures constituted signi®cant development activities of colonial territories. Most post-independence economies have not signi®cantly changed from their colonial orientations. Some development economists and international development institutions argue that developing countries still have enormous opportunities to increase the production and export of primary commodities such as co€ee, cocoa, palm oil, rubber, soyabean oil, food grains, timber products, ®sh, meat, and certain fruits and vegetables which have high income and price elasticities in the developed countries. In other words, there are opportunities for developing countries to gainfully participate

q

This paper is based on a doctoral thesis titled Planning and Financing Productive Projects in the Non-traditional Export Sector for Economic Development in Ghana: A Study of the Roles, Strategies and Impact of Facilitating and Financial Institutions (Addo, 1996). * Corresponding author.

in international trade (Boateng, 1996; Varangis et al., 1995; Wong and Kirmani, 1995; Boorman, 1995; World Bank, 1981). In more recent years, market liberalization, export diversi®cation and export-oriented industrialization strategies have become a primary concern of developing countries as a means of keeping up with the shifting international trade environment. International institutions such as the International Monetary Fund (IMF) and the World Bank have, in various ways, been involved with these trade strategies. They urge member countries to adopt macroeconomic policies conducive to sustainable growth, provide temporary ®nancial assistance to countries with balance of payments diculties, promote the convertibility of currencies essential to the development of a multilateral system of payments and multilateral trade relations, and promote trade liberalization (Ouattara, 1995). These economic curative strategies (collectively known as structural adjustment program (SAP) or economic recovery program (ERP)) have been popular in many developing countries since the early 1980s. The SAP/ERP generally entails three interrelated phases intended to generate sustainable growth and development: stabilization (correction of structural imbalances), rehabilitation

0016-7185/00/$ - see front matter Ó 2000 Elsevier Science Ltd. All rights reserved. PII: S 0 0 1 6 - 7 1 8 5 ( 9 9 ) 0 0 0 4 9 - 4

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E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

(improvement in the utilization of existing capital assets), and liberalization (reduction of government intervention in the economy and increased trade liberalization). Recommended ®scal, monetary, production, and institutional policies of each phase are partially intended to stimulate production in the export sector (World Bank, 1984). Some empirical studies indicate that export diversi®cation/growth does not always result in economic growth in developing countries. Studies concentrating on individual countries and those involving a group of countries show contrasting evidences. Export growth/ diversi®cation and economic growth are a€ected in different ways by factors such as domestic and external political and economic conditions, the ecacy of public and private sector institutions, entrepreneurial skills, market conditions of exports and imports (for example, changes in the terms of trade), and technological advances (Yaghmaian, 1995; Fosu, 1990; Balassa, 1990; Moss and Ravenhill, 1989; Barrett and Browne, 1996; Truett and Truett, 1992; Ukpolo, 1994). Additionally, countries have unequal capacities to manage commodity booms and busts (Varangis et al., 1995). Since 1983, Ghana has been vigorously pursuing an export-diversi®cation strategy of development with more emphasis placed on the non-traditional export sector (NTES). The World Bank and the IMF have provided multilateral support and governments of some developed countries have provided bilateral assistance. Some analyses of the impacts of the ERP on the economies of developing countries provide con¯icting views (World Bank, 1984; Kapur et al., 1991; Goldsbrough et al., 1996; Armstrong, 1996; Owusu, 1998). This paper reviews the development strategies of the NTES and discusses government policies in relation to the planning strategies and expectations of the Ghana Export Promotion Council (GEPC) and the Export Finance Company (EFC), the two major institutions supporting the development of the NTES. The GEPC is the focal point institution responsible for the overall planning of the NTES. It is a facilitating public sector institution that collaborates with other institutions supporting the NTES. The EFC is a ®nancial institution purposely established by the government on the recommendation of the Bank of Ghana to provide ®nancial and non-®nancial support to only producers and exporters of non-traditional products (1). The paper also examines the export diversi®cation policies and strategies within the context of the ERP and the principle of comparative advantage, the basis of the neoclassical theory of international trade. Although the analysis is mainly qualitative and uses predominantly secondary data obtained from various institutional sources the paper provides additional insight into the subject of ÔdevelopmentÕ in Ghana, and for that matter, in a developing country (2).

2. Theoretical considerations1 Generalization of Eurocentric economic development theories and strategies and their application in developing countries have not been a smooth process, particularly in the post-World War II period. Di€erent conceptions of the content and pattern of economic development and di€erent historical, geographical and political circumstances have often caused theoretical contradictions. Some serious concerns have been expressed about the prevalence of crisis in development theory and the three worlds ± industrial capitalism (the Western Bloc, the First World), real socialism (the former USSR and her allies, the Eastern Bloc, the Second World), and the underdeveloped areas (developing nations; the Third World) (Hettne, 1990). Numerous theories and strategies, including those of international trade, have been discussed in the economic development literature from three broad perspectives: classical or neoclassical/modernization, dependency, and state-mediator (Grant and Agnew, 1996; Todaro, 1989; Baum and Tolbert, 1985; Park, 1979; Conyers and Hills, 1990; Thirwall, 1989; Hogendorn, 1992; Kirmani, 1995; Frank, 1966). Each perspective is relevant but not adequate to account for all the variations or trends in economic development in developing countries. Mainstream development economists and neoclassical trade theorists argue that international trade is an Ôengine of growthÕ. In order to reap the full bene®ts of trade there should be, among other things, a reduction in trade barriers, free international movement of capital, and di€usion of technical knowledge and skills. Comparative advantage, the basic principle underlying international trade, requires each country engaged in international trade to specialize in the production of the commodity in which its comparative cost is least. Specialization in production will lead to increased world production and if the countries exchange some quantities of the commodities (based on their agreed terms of trade and comparative cost ratios) they will be better o€ or at least one will be better o€ and none worse o€. The origin of the principle is traced to the works of two economists, Adam Smith and Stuart Mills (Yaghmaian, 1995; Moore, 1985, p. 1). Some gains in welfare from trade liberalization, within the context of imperfect competition, have been identi®ed: greater access for consumers to products on the domestic market whose international prices are lower than their domestic prices; access to a greater variety of designs for the various products available; expansion of production in sectors where prices exceed

1

It is beyond the scope of this paper to provide a comprehensive review of all development theories. Interested readers may refer to Hettne (1990).

E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

marginal cost; expansion of production in sectors subject to economies of scale; positive e€ects on the terms of trade; and positive e€ects on productivity (Ocampo, 1993, p. 133; Kirmani, 1995). Yaghmaian (1995) notes that the Ôvent for surplusÕ version of the neoclassical trade theory urges developing countries to specialize in the production and export of raw materials or primary products in return for ®nished manufactures from the developed countries. Export oriented industrialization (EOI), a development strategy more characteristic of the so-called newly industrializing countries (NICs) of the Asian Paci®c region, particularly Singapore, South Korea, Taiwan and Hong Kong, is also related to the principle of comparative advantage. Advocates of the EOI strategy argue that trade advantages are derived from specialization in low-wage and labour-intensive light manufactures for export. Contrary to this positive view Bello (1992) points out some ¯aws inherent in the EOI model: .... the export markets depended upon are becoming more protectionist; agriculture in those countries is being wiped out, with implications for food security; the ecological costs of industrialization have reached crisis proportion; the working class no longer accepts the legitimacy of the model and its associated repression of labor; and the lack of a sophisticated high-technology sector in these countries means that they have not avoided severe dependency on more advanced economies, especially Japan. Some lessons can be drawn from their experience, such as the usefulness of an actively interventionist state role in industry, but the general perceptions of the export-oriented industrialization model are no longer valid. As the ®nal part of the above quotation indicates, the role of the state has been a major factor in generating industrial growth in the NICs. Selective investments and restrictive trade liberalization on imports were initiated to support and sustain the export-oriented industrialization strategy of development. Ocampo (in Agosin and Tussie, eds., 1993, pp. 24±30 and 127) believes the remedial policies o€ered by the IMF and the World Bank to other developing countries deviate from the steps taken by the NICs ± state intervention in the economic development process. The literature further indicates that currency warfare, the abolition of import restrictions on US products, and technology protection undermine the credibility of the EOI model. Dependency theorists link underdevelopment in developing countries to international trade. The linkage portrays a weaker and subjugated role of developing countries (satellites) compared with an imperialistic and exploitative role of developed nations (metropolis). The satellites are perceived as producers and exporters of

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basically primary products and the metropolis as producers and exporters of manufactures. In this relationship which resulted from colonization and imperialism, developing countries are inhibited from creating the necessary domestic capital, entrepreneurship and technical skills needed for economic growth and development (Todaro, 1989, pp. 385±387; Agosin and Tussie, 1993, pp. 18±19; Frank, 1966; Amin, 1989). Dependency theorists also contend that comparative advantage in the agriculture, textile and clothing sectors has not been fully realized because of high trade barriers imposed by the metropolis. Additionally, the theorists argue that the neoclassical trade theory does not adequately discuss how unfavorable terms of trade and balance of payments impede economic growth in developing countries (Frank, 1966; Rodney, 1989, p. 34; Mabogunje, 1989, pp. 46±47). More recent literature on international trade indicates that the formulation of trade theories relevant to developing countries should take into account the main features of the imperfect market in which they trade. The features include: the technological dominance and increasing protectionism by the developed countries, the rise in power and in¯uence of various multinational corporations, the production of synthetic substitutes for traditional primary products of developing countries, and capital ¯ight from developing to developed countries (Wong and Kirmani, 1995; Yeates, 1995; OwusuSekyere, 1992). Distortions in domestic production methods due mainly to external in¯uences such as declining commodity prices, unfavourable exchange rates, and restrictions on exports have been cited as strong reasons for promoting trade among developing countries (i.e., South±South trade). The same reasons justify government intervention to restructure production patterns and to channel institutional incentives to speci®c production units. South±South trade provides opportunities for learning by doing, shared technological requirements, and the advantages of appropriate technology supposedly embodied in capital goods produced by developing countries (World Bank, 1981; Krueger, 1992; Agosin and Tussie, 1993, pp. 1±30; Todaro, 1989, p. 390; Thirwall, 1989, pp. 370±372). State-mediator theorists stress the poor ®t of both neoclassical and dependency theories to developing areas. They maintain that local contextual factors are very crucial in understanding the variations in economic performance. Administrative capabilities, political ideologies and practices, perception of economic crises and pitfalls, technocratic autonomy, and power exercised by public ocials are important factors that account for the variations in economic performance. These factors account for the di€erences even among countries that were once under the same colonial hegemony (Grant and Agnew, 1996; Callaghy, 1990, Mohan, 1996; Bienen, 1990).

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State-mediator theorists further maintain that if the term Ôeconomic developmentÕ is to have any analytical meaning in the developing countries, it must be held against the possibility of political stagnation or decay. Economic growth requires basic changes in attitude and a favorable and stable political climate. A counter argument, however, is that much of the internal political pitfalls in developing countries have colonial roots. As a matter of fact, many developing countries have never been economically and politically independent. In their development e€orts, foreign intervention, dictatorship and exploitation have sidetracked them (Mohan, 1996; Ould-Mey, 1994).

stead, both export-oriented and import-substitution strategies of development were vigorously pursued. International interdependence was guaranteed through export of cocoa, timber and minerals, import of capital goods for investment and consumption goods for the expanding population, and the need for technical expertise and ®nancial aid (Killick, 1978; Boateng, 1966; Boahen, 1975). International interdependence has not, however, met GhanaÕs development needs. GhanaÕs external trade performance was not impressive in the 1970s and early 1980s. Tables 1 and 2 provide some relevant foreign trade statistics for the 1970±1981 period and export performance in comparison with sub-Saharan Africa.

3. Ghana: historical and economic context The mention of Ghana (Fig. 1), known formerly as the Gold Coast before independence was gained from Britain in 1957, often brings to mind issues of military intervention in politics and economic mismanagement, but such issues were more prevalent between 1957 and 1982 (Hettne, 1990, pp. 24±25; Ofori Atta, 1988, pp. 16± 17). The development policies and strategies adopted by the ®rst post-independence government of President Kwame Nkrumah (1957±1966) were a blend of Western Bloc modernization and industrialization, and Eastern Bloc socialism, emphasizing the role of the state in directing economic development. Successive governments followed in NkrumahÕs footsteps although distinct changes did occur in policy and planning strategies. In less than a decade after independence, Ghanaians, particularly the countryÕs political leaders, realized that political independence was not a guarantee for economic independence and prosperity. The need for economic and political cooperation with Britain and her allies was indispensable. Ghana was previously linked to the economies of Europe through external trade with Portuguese, Danish, French and Dutch merchants and missionaries and by its status as a British colony. Political independence did not sever these linkages. In-

Fig. 1. Ghana ± administrative regions.

Table 1 Foreign trade indicators (1970±1981)a

Exports±GDP ratio Imports±GDP ratio Ratio of exports to imports Exports as % of world imports Export quantum index (1975 ˆ 100) Import quantum index (1975 ˆ 100) Terms of trade index (1975 ˆ 100)b Purchasing power of exportsc a

1970

1975

1978

1979

1980

1981

20.7 18.5 1.12 0.15 103 114 122 1045

17.6 17.2 1.02 0.10 100 100 100 728

8.2 7.7 1.07 0.07 59 78 138 658

10.9 9.2 1.19 0.07 52 66 150 630

8.5 7.8 1.08 0.06 54 57 111 505

3.6 3.6 1.0 0.05 49 41 81 n.a

Source: World Bank (1984, p. 8). Terms of trade ˆ the export price index divided by the import price index. c Export earnings de¯ated by import value index. b

E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

359

Table 2 Annual average growth of exports (%)a Priceb

Volume Sub-Saharan Africa

Cocoa Timber Bauxite Goldc

Ghana

1960±1970

1970±1980

1960±1970

1970±1980

1960±1970

1970±1980

)0.8 4.4 12.5 2.3

)1.4 )0.5 25.0 )4.2

)3.6 6.7 ) )2.4

)6.2 )14.1 )4.3 )7.1

5.4 1.0 5.6 )

14.2 0.4 2.2 32.8

a

Source: World Bank (1984, p. 10). Export unit value index. c World gold exports. b

Exports±GDP ratio, imports±GDP ratio, and exports as percentage of world imports decreased (Table 1). In the 1960s and 1970s, successive governments had to grapple with persistent decreases in the volume of traditional exports (Table 2). In the mid-1970s, Ghana was overtaken by la Cote dÕIvoire (the Ivory Coast) as the worldÕs leading producer of cocoa. According to a World Bank report, in 1981 GhanaÕs cocoa export volume was less than half of that of 1975 and the countryÕs exports as a proportion of world imports had declined to 0.05% compared to 0.15% in 1970. Ghana did not bene®t from unprecedented high world prices for cocoa and gold because of the steepest decline in production between 1976 and 1979. The country could have earned an estimated US$600 million for the period (World Bank, 1984, p. 8; Jebuni et al., 1994). Domestic problems of rapid population growth, political instability, corruption, high in¯ationary rates, economic mismanagement, and a lack of con®dence in government policies have also negated GhanaÕs economic development. The 1970s and early 1980s witnessed a massive Ôbrain drainÕ of intellectuals and professionals to other countries in search of better job opportunities and living conditions (Gould, 1990, pp. 210±227; Therson-Co®e, 1984; Kapur et al., 1991). Since 1983, there have been frantic government efforts to resuscitate the economy through structural reforms (i.e., the Economic Recovery Program, ERP) recommended and supported by the World Bank and the IMF. Vital ingredients of the ERP have included: an increased privatization of productive sectors of the economy, exchange rate adjustments of the cedi (Ghanaian currency), institutional building or transformation, public sector retrenchment, market determination of prices and interest rates, and trade liberalization favoring increased exports and imports (Bentsi-Enchill, 1988; Kapur et al., 1991; Asmah, 1993; World Bank, 1984). The NTES which produces agricultural, processed and semi-processed, and handicraft products has been

accorded unparalleled attention by the government within the context of the ERP. This commitment was necessitated by the worsening terms of trade for the countryÕs traditional exports. Examples of NTES agricultural products are pineapples, mangoes, fresh chilies, okra, beans, aubergines, copra, rubber, yam, cassava (manioc), ®sh (tuna), shrimps, lobsters and prawns, cashew, pawpaw, avocado pear, and plantains. Processed and semi-processed items include furniture parts (completely knocked down and semi-®nished), veneer, plywood, wooden toys, aluminum utensils, canned fruits and vegetables, chocolate, common salt, agricultural implements and food processing machines; and handicrafts include decorative ceramics, ¯oor tiles, beads, textiles (ÔkenteÕ and batik), carvings, basketware (cane, straw and bamboo), and jewelery (GEPC, 1987). 4. Institutional building and policy initiatives in support of the NTES The need for export diversi®cation was recognized by the government of Ghana in 1969 when the Ghana Export Promotion Council (GEPC) was established. Import restrictions (i.e., surcharges) and export promotion packages to boost non-traditional exports were introduced. However, these policies were implemented without a comprehensive national development plan until the early 1980s (Obeng, 1985). For example, Combined Farms, near Nsawam in the Eastern Region (see Fig. 1), started large-scale production of pineapples for export to Germany, the United Kingdom and Switzerland in the 1970s but did not receive any government support until 1983 (Addo, 1985). The political commitment made by the government of the Provisional National Defence Council (PNDC) under the leadership of Flight Lieutenant J.J. Rawlings to the NTES within the context of the ERP in 1983 was, therefore, a major shift in the focus, emphasis and pattern of national economic development policy.

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E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

The PNDCÕs commitment to export diversi®cation necessitated the introduction of new policies and programs to remove the following major constraints on the NTES: a weak production base, high domestic production costs causing uncompetitive prices on the world market, the non-availability of funding, poor marketing infrastructure, inadequate export incentives, a lack of knowledge about export procedures, and weak institutional support for export development. The creation of export awareness throughout the country was accorded a high priority and institutional reforms were introduced to ensure that ®nancial requirements of the NTES were adequately met, export procedures were streamlined, and incentives were expediently and ¯exibly provided. The restructuring of the Ministry of Trade and Tourism (MOTT) and GEPC to facilitate export administration and documentation formed part of these reforms. The restructuring of MOTT and GEPC involved recruitment of new sta€, training of personnel in international trade, and provision of modern oce equipment such as computers, fax machines and photocopiers. Regional oces of GEPC were established to meet the needs of rural producers and exporters. The responsibility of making the national export diversi®cation program successful was placed squarely on the shoulders of GEPC. The government was committed to providing ®nancial support to the NTES through budgetary allocations to GEPC. Concomitantly, a major reform of ®nancial institutions undertaken in 1987 was aimed at streamlining their transactions both nationally and internationally in support of the NTES. The most signi®cant boost to the NTES was, however, the establishment in 1989 of the Export Finance Company (EFC) to tackle the problem of inadequate export ®nancing (Ephson, 1988; GEPC, 1987, 1989; Ghartey, 1989; Noonoo, 1991; interview responses in 1994). The PNDCÕs export diversi®cation strategy also introduced six major incentives to producers and exporters in the NTES: (i) a retention of 35% of export earnings in foreign exchange (the remaining 65% to be provided in cedis by the government), (ii) a corporate tax rebate which allows manufacturers or agricultural producers exporting part or all of their produce to claim 30±75% of their tax liability, (iii) a customs duty drawback allowing exporters to draw back up to 100% of duties paid on materials imported to produce goods for export, (iv) the establishment of bonded warehousing allowing manufacturers to seek customs licenses to hold raw materials intended for manufacture for export in warehouses without payment of duty, (v) an upfront duty exemption which operates alongside the duty drawback system enabling exporters to enjoy 100% duty exemption on imports intended to go into export, and (vi) an annual national award scheme for export achievement involving the presentation of prizes to leading exporters. First prize winners are presented with

ÔAko BenÕ2 trophies and airline tickets donated by various companies to undertake market missions abroad (Mantey, 1989; GEPC, 1987, 1989). GEPC has grouped institutions involved with the development of the NTES into facilitating and ®nancial institutions. The former include GEPC, MOTT, the Ghana Standards Board (GSB), the Customs Excise and Preventive Services (CEPS), the Ghana Ports and Harbours Authority (GPHA), the Ghana Trade Fair Authority (GTFA), the Civil Aviation Authority (CAA) and the Ghana Investment Centre (GIC). These institutions work in close collaboration with the latter consisting of the Bank of Ghana, commercial banks, development banks (i.e., the Agricultural Development Bank, ADB and the National Investment Bank, NIB), merchant and savings banks, and the Export Finance Company (EFC), which is in its infant stage but plays a leading role in pre-shipment ®nancing and post-shipment transactions. Institutions in both groups, however, provide ®nancial, administrative, and technical support to private-sector production and exporting enterprises/ projects in the NTES.

5. Planning roles and strategies of GEPC GEPC performs several planning roles including collaboration with other institutions supporting the NTES, drawing up speci®c plans for approval by the government, and helping with the implementation of projects in various locations in the country. It also ensures that producers and exporters become aware of and enjoy the incentives provided by the government by disseminating information on international trade policies and opportunities, organizing trade fairs and tours, running an export school to educate exporters, and organizing forums for exporters to discuss their needs and worries with government ocials. GEPC undertakes comprehensive planning comprising of sectoral, area/regional and project planning strategies. The planning practice takes into account the macroeconomic policies of the government (i.e., the ERP). Several internal and external constraints on the economy, in general, and the NTES, in particular, are identi®ed and relevant development objectives are set within the context of the ERP. Project identi®cation, appraisal, and selection are made on the basis of their viability, feasibility, and pro®tability. In both the ThreeYear Non-Traditional Export Development Plan, 1988± 1990 (the 3-year NTEDP, 1988±1990) and the Five-Year 2 ÔAko-BenÕ is a Ghanaian term for a special trumpet used during war time in traditional society. The ÔAko BenÕ trophy symbolizes a call to arms, encouraging exporters to be actively involved with the export diversi®cation drive.

E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

Medium Term Plan for Non-Traditional Export Development, 1991±1995 (the 5-year MTP-NTED, 1991± 1995), the criteria for selecting export products included: low import content, overall contribution to export earnings, existence of a limited organized production base and the potential for immediate export expansion, the degree of value-added, linkage e€ects on other sectors or projects, and the availability of ready external markets. A major objective of GEPCÕs comprehensive planning strategy is to provide administrative support for the establishment of Export Production Villages (EPVs). The EPV scheme evolved from the 3-year NTEDP, 1988±1990. The original idea was borrowed from Sri Lanka. Ghanaian authorities believed that the vast resources existing in rural areas o€ered the country distinct comparative advantages to implement rural-based export projects for economic development. The main objectives of the EPV scheme as set by GEPC are: to develop an e€ective institutional mechanism for the planning and co-ordination of rural-based export production and marketing; to create a regular and guaranteed market for rural export production; to ensure availability of supplies for sustainable export markets; to develop, improve and sustain entrepreneurship, production eciency and quality consciousness among rural producers; and ®nally, to create or enhance employment and income opportunities in rural areas thereby improving the standard of living of rural producers. The United Nations Development Programme (UNDP) and the government of Ghana jointly ®nance the EPV scheme. It entails community-based discussions on the formation of export-based companies and provision of product data, marketing plans, institutional support, and export incentives. In every case, agreements have to be reached between exporters and producers. A series of village level meetings lead to the implementation of agricultural, manufacturing and handicraft projects. As of December, 1993, ®ve EPV projects had been implemented producing yams, black pepper, rattan products and wood carvings in the Eastern, Greater Accra, Ashanti and Western regions of the country (see regions in Ghana, Fig. 1). Projects that were being appraised for implementation included farms and ®rms to produce cashew, chilies, mushrooms, sheet

361

rubber, common salt, and ÔalataÕ soap (made from plantain peels). To a large extent, GEPCÕs comprehensive planning strategy is a Ôtop-downÕ approach to development. The planning process is closely monitored and censored by government appointees who unconditionally endorse macroeconomic policies formulated within the context of the ERP. The planning of the EPV scheme by GEPC is, therefore, a commitment to prior decisions of the national government. This high-pro®le political involvement has had mixed results. There has been a nationwide interest in non-traditional export projects but ®nancial constraints (limited budgetary support) and high expectations have caused some planning and policy dilemmas among government and planning ocials (personal interviews and questionnaire responses, 1994). 6. Planning and policy dilemma ± the issue of ®nancial constraints The di€erent sources of project ®nancing may include domestic public (i.e., budgetary allocations or institutional credit provided by government controlled banks), domestic private (i.e., investment and loans provided by private companies and individuals), foreign private (i.e., investment or loans provided by external companies or foreign entrepreneurs), and foreign public (i.e., loans, grants and development aid made available through bilateral/country and multilateral arrangements and/or development ®nance institutions). GEPC depends on budgetary allocations and foreign public assistance. The extent of ®nancial support needed for ecient operation for the 1988±1995 period was determined in the 3-year NTEDP, 1988±1990 and the 5year MTP-NTED, 1991±1995. The long-term objective of the two plans was to realize an increase in the relative share of non-traditional exports in total export earnings from 5% in 1988 to 15% in each subsequent year. The success of the two plans was, therefore, contingent upon the removal of ®nancial constraints identi®ed with the NTES. GEPC had high expectation of project ®nancing from both domestic and foreign public sources. Table 3 highlights the ®nancial data of the 3-year NTEDP, 1988±1990. An amount of US$67,665,600 was expected from external sources. This was split into

Table 3 Estimated annual appropriations of external inputs/cost (US$) for the NTES, 1988±1990a

Institutional level Enterprise level Yearly total a

Source: GEPC (1990).

1988

1989

1990

Total (1988±1990)

2,117,900 32,594,290 34,712,190

1,289,730 14,756,900 16,046,630

1,289,730 15,835,370 16,906,780

4,479,040 63,186,560 67,665,600

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Table 4 NTESÕs development activities and proposed sources of funding, 1988±1990a

a

Activities

Proposed funding governments/agencies

Production development Export market development External study tours, attachments, training and institutional building Local training Domestic export publicity International conferences

Italian, Norwegian and Canadian governments; FAO; World Bank Italian, Norwegian and Canadian governments; World Bank Italian and Canadian governments; UNDP Government of Ghana (GEPC) Government of Ghana (GEPC) Government of Ghana (GEPC) and Norwegian government

Source: GEPC (1987).

US$63,186,560 for enterprise level (project) investment and US$4,479,040 for institutional development. A domestic contribution (i.e., budget allocation) of cedis 107,691,000, an equivalent of US$615,377.14 (i.e., cedis 175 ˆ US$1 at the time of planning) was requested by GEPC. Foreign assistance was to be used for both promotional and productive activities. The governments of Norway, Canada, and Italy were expected to be the key donors with further support coming from the World Bank, the Food and Agricultural Organisation (FAO), the United Nations Development Program (UNDP), the Overseas Development Administration (ODA) of the UK, and the government of the Netherlands (Table 4). Both domestic and foreign sources of project ®nancing had poor track records. The ®nancial gap between what was expected and what was actually realized grew wider yearly. The 1990 GEPC Draft Working Paper, which outlined a program to address ®nancial constraints a€ecting export performance and promotion, indicated that although budgetary allocations to GEPC increased between 1987 and 1990, they were far below what were approved or expected. As Table 5 shows, GEPC received, on average, just 42.6% of what was actually approved by the government as budget allocations. Over cedis 1.52 million was added to the budget amount in 1987. This additional amount was intended to cover increases in remuneration and operation costs as GEPC expanded its planning roles. In subsequent years, the amount released fell far below budget ap-

provals resulting in rising ®nancial insuciency (Table 5, last column). The ®nancial constraints on GEPC adversely a€ected its operations. Some senior ocials of GEPC admitted that EFC, GEPC and other facilitating institutions had never been adequately funded (personal interviews). They also believed that GEPC needed changes in its funding regime because of the low budgetary releases from the government. A number of recommendations were presented to the Ministry of Finance and Economic Planning but were not approved because of differences in opinions. The recommendations included the severance of GEPC from direct funding by the central government, with resources being channelled to it through a new Export Development and Investment Fund (EDIF). It was proposed that the EDIF could be raised in three ways: an imposition of a ®xed 1% levy on imports, the search for external grants and credits, and allowing GEPC to impose and collect service charges and fees (i.e., becoming pro®t-making). Reduced government control of GEPC and expansion of its promotional roles were strongly recommended. The ®nancial constraints on GEPC during the 1988± 1990 planning period were carried over to the 1991±1995 planning period. The level of budgetary support for the latter period was estimated to be US$113.57 million, of which US$77.5 million was a domestic component to cover ®nancial needs of the NTESÕs facilitating institutions and EFC (Table 6). The total amount of US$26.33

Table 5 GEPCÕs budgetary approval and releases for 1987±1990 (amount in million cedis)a

a b

Year

Amount budgeted

Amount approved

Amount approved over budgeted (%)

Amount released

Amount released over approved (%)

Financial gap (%)

1987 1988 1989 1990b

33.60 91.56 268.07 353.87

33.60 82.87 249.29 334.50

100.0 90.5 93.0 94.5

35.12 43.60 107.59 112.00

104.5 52.6 43.2 33.5

4.5 )47.4 )56.8 )66.5

Total

747.10

700.26

93.7

298.31

42.6

)57.4

Source: GEPC (1990). Up to September 30.

E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

363

Table 6 Estimated budgetary support in the 5-year MTP-NTESD (US$ million)a

a

Institution

1991

1992

1993

1994

1995

Five year total

Share of ®ve year total (%)

GEPC EFC MOTT GSB GIC

3.95 12.00 1.68 0.86 )

5.50 15.00 2.47 0.30 2.65

5.03 13.00 2.53 0.32 3.25

5.59 10.85 2.80 0.34 3.49

6.26 9.50 3.00 0.36 2.84

26.33 60.35 12.48 2.18 12.23

23.18 53.14 10.99 1.92 10.77

Annual total

18.94

25.92

24.13

23.07

21.96

113.57

100.00

Source: Field Survey (1994).

million (i.e., 23.18%) apportioned to GEPC was made up of US$12.44 million in foreign currency and an equivalent of US$13.89 million in cedis. There was no guarantee that the government would release the amount. Like the domestic source of funding, the external sources had been characterized by inadequate contributions, thus causing concern for GEPC ocials: Apart from US$1.94 million and US$2.7 million secured for 1991 and 1992 respectively, from such aid agencies as the UNDP, Commonwealth Secretariat, Norwegian Government, the World Bank, the EEC and the Overseas Development Agency for the GEPCÕs foreign currency components of the programmed activities, no de®nite pledges have been made for the foreign currency components in 1993, 1994 and 1995. The 1991 and 1992 commitments still fall short of the budgetary requirement for the GEPC. Pledges for funds of US$80±US$120 million have been made by the USAID under a proposed export development assistance project; a request will be made under the UNDP 5th cycle programme for some aspects of GEPC activities. E€orts will be made by the GEPC to attract sponsorship from the above mentioned aid agencies as well as those to be identi®ed within the plan period (GEPC, 1990, p. 7).

Since the launch of its operations in 1990 EFC has also been facing serious ®nancial problems. Its initial shareholdersÕ contribution of cedis 120 million constituted just 9.1% of the value of total shares ¯oated and the company had to rely on the sale of export ®nance bills (EFBs) on short-term maturity (90 days) at a high interest rate (over 20%) for supplementary ®nancing. In order to facilitate payment of matured bills, EFC adopted the practice of granting credit to exporters with 90 days maturity (i.e., borrowing cycle) to match the credit cycle of the EFBs. This ®nancial practice was undertaken with the assumptions that exports would be readily available, export-based transactions would, in most cases, be backed by irrevocable letters of credit, and export proceeds would be smoothly transferred into exportersÕ accounts immediately after exporting to enable them to make loan payments to their creditors. These assumptions were soon found to be unrealistic and caused the suspension of three important schemes ± the export credit guarantee, export insurance, and export re®nance. Consequently, EFCÕs planning and ®nancing of export projects were restrained (Ghartey, 1989; Noonoo, 1991; responses to questionnaires, 1994). The reduction in ®nancial support provided by EFC to exporters in 1992±1993 compared to what was provided in 1990±1991 is revealed in Table 7. EFCÕs disbursements made to 509 exporters totaled cedis 13.8 million for 1919 transactions. The highest disbursement of cedis 6.6 million was made in 1991 to 148 exporters

Table 7 EFCÕs disbursements to non-traditional exporters, July 1990±June 1993 (amount in cedis)a

a

Period

Number of exporters

1990 1991 1992 1993

73 148 283 5

220 992 547 160

2,517,854,857.12 6,644,911,850.00 3,686,801,885.45 962,100,079.58

30,000,000 40,000,000 10,000,000 20,000,000

Cumulative values 1990±1991 1990±1992 1990±1993

221 504 509

1212 1759 1919

9,162,766,707.12 12,849,568,592.57 13,811,668,672.15

41,000,000 26,000,000 27,000,000

Source: Field Survey (1994).

Number of transactions

Total disbursement

Average disbursement

364

E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

within the context of the ERP, taking into account the prevailing political, economic, and social climate. This section of the paper analyzes the performance of the NTES in relation to all merchandise exports and plan targets set by GEPC within the context of the ERP. Fig. 2 and Table 8 show the earnings of the NTES for the 1984±1992 period. In absolute terms, the earnings were impressive, particularly from 1986 to 1988 when the amount increased from US$23.8 million to US$42.3 million. Those three years could be considered a ÔboomÕ period for the NTES. Yearly comparisons indicate that the most outstanding performance was recorded in 1986 when US$23.8 million was earned, an annual change of 981.8% from 1985 when only US$2.2 million was generated. In subsequent years, apart from 1989, export earnings increased rather steadily reaching US$64.9 million in 1992. The low earnings of US$34.7 million in 1989 were due to adverse weather conditions which affected mostly agricultural and agro-based manufacturing projects (interview and questionnaire responses). The average annual percentage change in the value of non-traditional exports for the 1985±1992 period was more than 142%, compared with 7.54% for all merchandise exports. The former was much in¯uenced by the 981.81% change recorded in 1986. If that extreme value is excluded, the average change for the remaining seven years would be 21.46%, still higher than a corresponding change of 5.4% for all merchandise exports. A di€erent picture, however, emerges when non-traditional exports are calculated as a percentage of all merchandise exports (Fig. 3 and Table 8). The NTESÕs share in the total value of merchandise exports increased from 0.34% in 1984 to 7% in 1990, declined to 6.27% in 1991, and increased slightly to 6.58% in 1992. Thus the NTESÕs contributions, although positive, were quite moderate. Between 1984 and 1987 when the values of non-traditional exports increased quite signi®cantly, the

and involved 992 transactions. Although the number of exporters bene®ting from EFCÕs scheme increased to 283 in 1992, the number of transactions declined, causing a lower average disbursement of cedis 10 million compared to cedis 40 million in 1991. By mid-1993 only ®ve exporters had been ®nancially supported by EFC in 160 transactions and less than cedis 1 million had been disbursed. The ®nancial constraints that plagued both GEPC and EFC adversely a€ected their project planning practices and caused policy dilemmas. The government made ®nancial promises to the export diversi®cation program but was unable to honor them and did not allow GEPC to be an autonomous, pro®t-making institution. Although the exact extent to which this situation had negatively a€ected the NTES could not be estimated because of private sector participation, it could be argued that the ®nancial expectations of GEPC, EFC, and the government were too high.

7. Planning and policy dilemma ± the issue of targets and achievements The economic performance of the NTES or any other sector of GhanaÕs economy since 1983 must be evaluated

Fig. 2. Export earnings of the NTES, 1984±1992 (Source: Field Survey, 1994; ISSER, 1993) .

Table 8 Contribution of non-traditional exports to total export values (FOB), 1984±1992a

a

1984

1985

1986

1987

Value of merchandise exports (FOB), US$ millionb Value of non-traditional exports, US$ million Value of non-traditional exports as % of value of merchandise exports

565.9 1.9 0.34

632.4 2.2 0.35

773.4 23.8 3.08

820.8 28.0 3.41

881.0 42.3 4.80

807.2 34.7 4.30

896.8 62.3 7.00

997.7 62.6 6.27

986.3 64.9 6.58

Yearly % change in the value of merchandise exports Yearly % change in the value of non-traditional exports

) )

11.75 15.79

22.30 981.81

6.13 17.65

7.33 51.07

)8.38 )17.97

11.10 79.54

11.25 0.48

)1.14 3.67

Number of non-traditional products (types) Number of non-traditional exporters Average value of non-traditional exports per exporter, US$Õ000

n.ac n.a )

n.a n.a )

99 373 63.8

Sources: Field Survey (1994); ISSER (1993). Jebuni et al. (1994). c n.a ˆ not available. b

134 687 40.1

1988

166 1331 31.8

1989

167 1381 25.1

1990

164 1729 36.0

1991

155 2822 22.2

1992

155 2449 26.0

E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

365

country could only be claimed on the basis of the NTESÕs 15% share of the total value of merchandise exports. While the expectations of GEPC have been quite high, in relative terms the actual achievements of the NTES have been moderate, a situation which demands more visionary strategic planning and policy formulation.

8. Conclusion

Fig. 3. The NTESÕs percentage share in the value of all exports, 1984±1992 (Source: Based on data in Table 6).

8.1. Recommendations in relation to identi®ed constraints on the NTES

yearly contribution to the value of all merchandise exports was less than 4% and in 1988 when the 3-year NTEDP, 1988±1990 was implemented, the contribution was 4.8%. Another dilemma of GEPC was related to the increasing gap between planning targets and the actual achievements of the NTES. As Table 9 shows the difference between the two variables (i.e., target and achievement) was positive in 1987, 1988 and 1990 but negative in 1989, 1991 and 1992. The monetary value of the negative variations was more than the positive variations (i.e., US$46.3 million and US$23.2 million, respectively), a di€erence of US$23.1 million. It was in 1991 and 1992, the ®rst two years of the 5-year MTPNTED, 1991±1995, that the widest gaps (i.e., negative variations) occurred, )27.3% in 1991 and )46.8% in 1992. While GEPC was quite aware of the ®nancial, political, economic, and technical constraints on the NTES, it had limited means to fully redress them in its planning activities. Analyses of percentage variations from plan targets and actual values of exports indicate that the NTESÕs overall performance fell below expectations during the 1987±1992 period for which data were available. In both the 3-year NTEDP, 1988±1990 and the 5-year MTPNTED, 1991±1995 the plan target set by GEPC for the NTES was a 15% share of the total value of merchandise exports. It was admitted in the latter plan that a satisfactory export diversi®cation and development of the

The need for Ghana to diversify her economy became more pertinent in the 1970s when she experienced declines in volumes of traditional exports due mainly to domestic constraints and economic mismanagement. The country was unable to take full advantage of relatively high prices for her traditional exports and stable terms of trade in the 1970s. NkrumahÕs economic development strategies were a blend of Western Bloc modernization and Eastern Bloc socialism. Successive governments, until 1983, did not place much emphasis on export diversi®cation in economic development. The launch of the ERP in 1983 by the PNDC government with initial support from the IMF and the World Bank emphasized the need for export diversi®cation and growth. The NTES has been given unmatched political attention. The economic rationales for the development of GhanaÕs NTES are laudable ± to reduce the adverse impact of deteriorating terms of trade for traditional exports, to increase export earnings, and to provide additional impetus for economic development. It is obvious that the export diversi®cation process is nurtured by the concept of comparative cost advantage that derives from the neoclassical trade theory (earlier discussed in this paper). Some conclusions can be drawn from the empirical analyses of the NTES. The NTES enjoys the support of the government and donor agencies but it is not immune

Table 9 GEPCÕs plan targets and actual achievements of the NTES, 1987±1992a Target/achievement/variance Target (US$ million) Achievement (US$ million) Di€erence between target and achievement (US$ million) Achievement (%) Target (%) Variation from target (%)b a b

1987

1988

1989

1990

25.8 28.0 2.2

32.7 42.3 9.6

36.3 34.7 )1.6

108.5 100.0 8.5

129.4 100.0 29.4

95.6 100.0 )4.4

Source: Field Survey (1994). Calculated as: [(achievement/target) ´ 100] ) 100 or achievement (%) ) target (%).

1991

1992

50.9 62.3 11.4

86.1 62.6 )23.5

122.0 64.9 21.2

122.4 100.0 22.4

72.7 100.0 )27.3

53.2 100.0 )46.8

366

E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

to the same international trade regulations and irregularities that traditional exports have been subjected to (for example, declining prices, worsening terms of trade, manufacturing of synthetic substitutes, and dumping of cheap exports on the markets of developing countries). The government of Ghana and GEPC should not be oblivious of the fact that a successful economic diversi®cation program demands more than institutional planning, policy formulation and political rhetoric like the following made in relation to the award of the ÔAkoBenÕ trophy: This call from the Ghana Export Promotion Council is for our exporters to devise strategies for market penetration, to adopt tactics to launch relentless assault on new markets and capture them. The artillery to be marshalled for the o€ensive must be knowledge, careful planning, aggression and versatility. The war being fought on the battle ®elds of trade and commerce would be won by those who have combined meticuluous planning with the courage to die. The Government is committed; hence the call to arms. Relentless e€orts are going on to get the institutions and structures right to service exportersÕ undertaking. We must, as a nation, rally to the call of the AKO-BEN and achieve greater victories, in our economic development (The Exporter, vol. 6, No. 9, November 1989±June 1990, p. 44). Ghanaian non-traditional producers and exporters can take advantage of temporary or occasionally favorable demand for their products, but to win the war and sustain the victory requires comprehensive and long-term production and marketing strategies as well as putting up a good ®ght for a just international economic order. Trade with other developing countries (i.e., South± South trade) should be strengthened as part of the external trade war strategy. The market potential of the South is still largely untapped. Improved political relations and market research are needed to take full advantage of this market potential. The literature on the subject indicates that many advantages can be derived from this pattern of trade: shared technology; employment creation, particularly in the primary sector; political stability and economic cooperation that may curb incidents of illegal trade and foster more economic growth (Ellis and MacGa€ey, 1996). The NTES is still plagued with development constraints ± a weak production base for most products, inadequate ®nancial support for both producers and exporters, and bureaucracy associated with export transactions. There are disagreements between politicians and planners on budgeting, policy formulation, and plan implementation. The politicians fail to honor

budget promises and the planners fail to plan strategically and e€ectively. Both parties have high expectations for the NTES and in the planning process the latter sets unrealistic targets in spite of prevailing and perceived constraints. There is the need for GEPC and EFC to engage in more strategic planning from a problem-avoidance perspective instead of continuing with the present comprehensive planning from a problem-solving perspective. In pursuing the former, realistic targets should be set taking into account the limited resources from both domestic and external sources. The commitments of donor agencies and foreign governments have to be ascertained in advance before plans are drawn up. The unsatisfactory responses of donor agencies and foreign governments raise some doubts about their genuine commitments to the success of the NTES, and for that matter, the success of the ERP, a situation akin to the Ôfalse paradigm of developmentÕ postulated by the international dependence school (Todaro, 1989, pp. 80±81). The government should encourage private sector participation in the activities of GEPC and also encourage domestic banks to o€er more direct assistance to the NTES. The assistance should be backed by a favorable credit guarantee scheme operated by the Bank of Ghana. The 35% foreign exchange retention incentive is not good enough to encourage export diversi®cation and external trade. At least a 50% retention should be provided in view of the fact that exporters need more foreign exchange for external trade transactions. The government should also invest a greater portion of the foreign exchange taken from non-traditional exporters in research and development bene®cial to the NTES. Two signi®cant development issues not receiving attention in the export diversi®cation drive are environmental soundness of export-based projects, and social and economic equity in terms of income generation and distribution. Spatially, most of the export projects are located in the Eastern, Ashanti, Western, Greater Accra, Brong Ahafo, and Central Regions (see Fig. 1) where productive resources and infrastructure are available. The government and planners should pay some attention to policies that provide spatial balance in terms of export project development. Attention should also be paid to environmental and social issues and equitable allocation of institutional credit. Owusu (1998) o€ers similar recommendation in his studies on the impact of the ERP on the forest sector of Ghana. So far the major concern of the government and donor institutions has been economic growth in terms of physical output and export earnings of the NTES ± the macroeconomic perspective of development. The human and microeconomic perspective is equally important and must be seriously considered in the development process. These issues o€er opportunities for future research. Analyses of the operations of EPVs and the views and

E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

contributions of individual exporters are also worth considering. Undoubtedly, the government, GEPC and EFC deserve some commendation for the modest achievements. They must, however, plan more e€ectively for the NTES to realize its full potential. 8.2. Empirical ®ndings and development theories The three theoretical perspectives on economic development discussed earlier in this paper have jointly prevailed in Ghana since the launch of the structural adjustment program in 1983. The perspectives can be identi®ed with di€erent facets of the NTES development process. The diagnosis of GhanaÕs economic ailment and recommendation of remedial policies by the IMF and the World Bank, the PNDC governmentÕs acceptance of the economic and ®scal reform package and conditionalities of these institutions, and the in¯ow of bilateral and multilateral capital and human resources form part and parcel of the neoclassical theoretical perspective. The provision of export development incentives to producers and exporters of non-traditional products, and the restructuring of export facilitating and ®nancial institutions are trade liberalization policies meant to boost exports, increase imports, generate more foreign exchange, and place the country in a favorable position on the league table of world trade. As indicated earlier in this paper, the economic performance of the NTES has not been very impressive due to factors such as low production, declining commodity prices on the world market, ®nancial constraints, and partial ful®llment of bilateral and multilateral aid promises. The fact that Ghana has to diversify her economy in primary production (i.e. non-traditional exports), 40 years after gaining political independence, calls to question the rationale for specialization and dependence on the traditional exports of cocoa, timber and minerals. The country has not been able to reap the full bene®t of comparative advantage in primary production of traditional exports. The NTES faces the same situation as import prices of manufactures soar, export prices plummet, exports decline, and international assistance falls short of expectation and shy away from industrial development. There is doubt about the country being able to ÔmodernizeÕ by specializing in the production of non-traditional exports. Some development theorists are creating a crevice in the principle of comparative advantage as the main basis of international trade. A new trade theory that considers increasing returns to scale has been postulated and is receiving serious attention. The theory hinges on industrial organization principles and stresses the need to model international markets as imperfectly competitive (Krugman, 1992). The theorists, however, have yet to

367

formulate new trade policies for their new perspective which could be useful for the analysis of international trade of developing countries. The dependency theoretical perspective has resurfaced in the works of some scholars sympathetic to the people and governments of the developing countries. Some have strongly argued that postcolonial trading systems are still explicable by a dependency theory (Grant and Agnew, 1996; Mohan, 1996; Ould-Mey, 1994). They cite as elements of dependency the incessant intrusion of donor institutions and development aid personnel into the economies of developing countries, the need for developing countries to export mainly primary products to industrialized markets and import manufactures, and the destabilization of nation states through globalization. From a dependency perspective, Ould-Mey has succinctly analyzed the global strategy of structural adjustment programs and their implications for peripheral states, using examples drawn from a case study of Mauritania. He argues that: Structural adjustment programs were conceived outside Africa by the industrialised countries whose primary interests lay in expanding their markets, increasing their exports and securing debt payments through a carrot and stick policy of providing loans to ®scally bankrupt Third World governments in exchange for fundamental reforms in their political economy (Ould-Mey, 1992, p. 319). Ould-Mey further admits that devaluation of currency that is meant to stimulate foreign demand for and boost exports rather results in net transfer of ®nancial resources from developing countries implementing structural adjustment programs to developed countries. This practice has direct repercussions on the comparative advantage of developing countries. It is, therefore appropriate to admit that Ôinternational exchanges are determined less and less by natural and given comparative advantages, but increasingly by rapidly evolving man-made advantagesÕ (ibid.). In the ®nal analysis it has to be understood that the manipulation of developing economies by multilateral institutions and governments of the developed countries is e€ectively transforming states from national to multilateral entities in the process of globalization. Mohan (1996) expresses the same views and points out that: The development and strengthening of international institutions under adjustment is bringing about a new form of multilateral imperialism which seems to heighten the grip around the national state while loosening direct control on internal groups and institutions. Ghana shares many characteristics with Mauritania as presented by Ould-Mey Mohan. The planning and

368

E. Addo, R. Marshall / Geoforum 31 (2000) 355±370

development of the NTES within the context of the structural adjustment program is characterized by dependency on foreign economies and institutions. Macroeconomic policies are dictated by the World Bank, the IMF, and donor nations. Markets for most non-traditional exports, like traditional exports are located in Western Europe and North America (USA and Canada). South±South trade involves commodities such as salt, ®sh, edible oil, vegetables, handicrafts, and textiles. These commodities normally face stringent import restrictions in developed countries. Domestically, nontraditional export projects have been mushrooming in the private sector but the government has been unable to e€ectively incorporate the needs of local entrepreneurs into national development plans. The role of the state in Africa and other developing regions in economic development has been very controversial. It has been instrumental in embracing foreign economic and political ideologies and at the same time weakening domestic economies. Western governments and institutions have been unequivocal in pointing out that the internal and external factors impeding economic growth in developing countries have been exacerbated by domestic policy inadequacies, particularly regarding the formulation and implementation of trade policies. Trade policies have overprotected local industries and slowed down the rate of economic growth. It has been argued that in most developing countries political rather than economic logic has prevailed in economic development since the dawn of independence. In order to get on the right track of economic development governments and the masses have to eschew their own vices and consider being active players in a global competitive market. Ghana has responded positively to such a call in many instances since independence but has not been able to have the opportunity to compete favorably. The U-turn of the once radical PNDC government to embrace the IMF/World Bank macroeconomic policies is a relevant example. But as earlier discussed under the dependency thesis, developing countries have not been politically and economically independent since colonization. Irrefutably, economic growth requires basic changes in attitude among masses of people and a stable political climate. The latter has eluded most developing countries since colonization. In the context of the economic recovery program, the inability of the Ghanaian government to fully honor ®nancial and administrative commitments to the NTES, the disagreement between planners of the GEPC and political leaders over policy and planning issues a€ecting the NTES, and the ineciencies of planners to plan effectively by taking into consideration the obvious constraints on the NTES suggest that local contextual factors are important but inadequate in understanding the performance of the NTES.

Development theorists still face the herculean task of incorporating all these perspectives in a single theory or set of theories that will adequately address the di€erences in development experiences of developing countries. The Ghanaian experience with non-traditional export production is worth considering in such a theoretical e€ort. 9. Notes Producers and exporters of non-traditional exports are private entities that independently seek the services and support of facilitating and ®nancial institutions. Analysis of the direct impacts of government policies on the operations of the producers and exporters of nontraditional products was not the focus of the Ph.D. thesis upon which this paper is based. Instead, the focus was on the planning roles of institutions and macro-level policies in support of the NTES. The research methodology involved the use of questionnaires, direct interviews with project planning ocers, and collection of secondary data. The ocers indicated the sources of secondary data that provided responses to the questionnaire survey. The Director of Human Resources Division of each of the institutions chose the ocers. Acknowledgements The authors are appreciative of the contributions made by Mr. Adom-Basie Ghartey of the Ghana Export Promotion Council, Ms Rose-Margaret Noonoo of the Export Finance Company, and Mr Emmanuel Otchere and Mr. Peter Boachie of the National Investment Bank, Accra, Ghana. The constructive comments of anonymous referees are also deeply appreciated. References Addo, E., 1985. Comparative analysis of private and state-owned large-scale farming: a case study in the Nsawam area. B.A Geography dissertation, University of Ghana. Agosin, M.R., Tussie, D., 1993. Trade and growth: new dilemmas in trade policy ± an overview. In: Agosin, M.R., Tussie, D. (Eds.) Trade and Growth. New Dilemmas in Trade Policy. Macmillan, London, pp. 1±39. Amin, S., 1989. Maldevelopment. Zed Press, London. Armstrong, R.P., 1996. Ghana Country Assistance Review. A Study in Development E€ectiveness. OED. A World Bank Operations Evaluation Study. Asmah, G.F., 1993. Banking in Ghana: Dramatic transformation. In: West Africa, vols. 1±7, February, pp. 152±155. Balassa, B., 1990. Incentive policies and export performance in subSaharan Africa. World Development 8 (3), 383±391. Barrett, H., Browne, A., 1996. Export horticultural production in subSaharan Africa: the incorporation of the Gambia. Geography 81, 47±56.

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