Tuesday, January 29, 2008

GHANA'S FUTURE: BEST CASE SCENARIO

So, I was kicking around the interweb and came across a page that collects material from economists in 500-1500 word articles. They are generally written in language that is accessible to non-economists, and cover a wide range of topics.

Friday I read the article entitled When Iceland was Ghana, by Thorvaldur Gylfason. It starts from the premise that as of 1901 Iceland was at the same level of per capita national output as Ghana is today. Thus, the question is whether Iceland’s tremendous economic growth over the next 107 years can be duplicated by Ghana.

At the risk of overly summarizing a 1500 word essay, Gylfason seems to identify two factors that were key to Iceland’s rise. First, it is necessary to get population under control. Iceland previously averaged almost 6 births per woman, but by 2007 the number is about 2.1. This is the minimum to maintain population stability. Ghana has apparently made great strides in cutting the number of births per woman in the last 50 years, but the number is still over 5.

Second is the investment in human capital represented by 100% literacy. By 1901 Iceland had enjoyed roughly two centuries of full literacy, and has some of the highest publication-per-capita of books rates in the world. If Ghana invests in education while controlling its population, Mr. Gylfason posits, it is possible that the country’s economy could take off on an Iceland style growth trajectory.

I took two interesting things from this essay. First, Mr. Gylfason does not necessarily account for Iceland’s very small size and isolation possibly being a factor on law-abiding behavior. There are roughly 300,000 people in Iceland. The country is not closer than 280 km to any other major landmass (Greenland), and is 970 km from Norway. It is in the middle of nothing. This could create a premium on law-abiding behavior that is perhaps not present in Ghana.

Second, Mr. Gylfason seems to sort of gloss over the fact that Iceland had a centuries-old tradition of literacy at the 1901 start date. Ghana may be able to get to 100% literacy (or not), but it would be in Iceland’s position in 2208, not 2008. This is important because Ghana is in a tougher neighborhood than Iceland, and it is not unlikely that Ghana will have social disruption from war in the area over the next 100 years. If literacy is not a deeply ingrained cultural value, it is certainly possible that it will be sacrificed in trying times.

What I think is interesting is that I have argued since college that Economics, History, and Political Science (and maybe Geography and the Law too) are really sides of a coin. None really are complete without the others. Gylfason seems to have taken an economists view of statistics, and posited causality. My criticisms are historical, maybe sociological (I never took that class, but law-abiding behavior seems like something they’d talk about), and historical. Hmmmm.

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