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Total Government Expenditures |
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Economic Freedom Rating |
As a Percent of GDP |
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 |
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Part 1: The Economic Freedom Ratings for the Components and Various Area and |
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Summary Indexes: 1975, 1980, 1985, 1990 and 1995. |
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(The numbers in parentheses indicate the actual values for the components.) |
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Components of Economic Freedom |
1975 |
1980 |
1985 |
1990 |
1995 |
|||||||||
I. Money and Inflation |
1.0 |
0.6 |
0.3 |
2.0 |
0.6 |
|||||||||
(a) Annual Money Growth (last 5 yrs.) |
1 |
(28.4) |
1 |
(42.4) |
1 |
(44.0) |
1 |
(37.8) |
1 |
(32.0) |
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(b) Inflation Variablity (last 5 yrs.) |
2 |
(8.7) |
1 |
(16.9) |
0 |
(38.2) |
5 |
(4.8) |
1 |
(21.9) |
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(c) Ownership of Foreign Currency |
0 |
0 |
0 |
0 |
0 |
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(d) Maint. of Bank Account Abroad |
0 |
0 |
0 |
0 |
0 |
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II. Government Operation |
3.4 |
3.5 |
3.9 |
3.3 |
4.7 |
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(a) Gov't Consump. (% of Total Consump.) |
7 |
(15.1) |
9 |
(11.7) |
10 |
(10.2) |
9 |
(11.6) |
8 |
(13.0) |
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(b) Government Enterprises |
0 |
0 |
0 |
2 |
2 |
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(c) Price Controls |
- |
- |
- |
0 |
6 |
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(d) Entry Into Business |
- |
- |
- |
- |
5.0 |
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(e) Legal System |
- |
- |
- |
- |
2.5 |
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(f) Avoidance of Neg. Interest Rates |
- |
0 |
0 |
2 |
4 |
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III. Takings |
4.5 |
5.0 |
5.4 |
5.5 |
7.4 |
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(a) Transfers and Subsidies (% of GDP) |
8 |
(3.1) |
8 |
(2.4) |
9 |
(1.3) |
8 |
(2.6) |
7 |
(3.3) |
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(b) Marginal Tax Rates (Top Rate) |
0 |
(70) |
1 |
(60) |
1 |
(60) |
2 |
(55) |
7 |
(35) |
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(c) Conscription |
10 |
10 |
10 |
10 |
10 |
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IV. International Sector |
0.6 |
0.0 |
0.3 |
1.8 |
3.0 |
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(a) Taxes on International Trade (Avg.) |
0 |
(20.6) |
0 |
(17.3) |
0 |
(21.7) |
1 |
(11.6) |
2 |
(8.1) |
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(b) Black Market Exchange Rates (Prem.) |
1 |
(67) |
0 |
(304) |
1 |
(142) |
5 |
(7) |
7 |
(2) |
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(c) Size of Trade Sector (% of GDP) |
2 |
(18.9) |
0 |
(8.8) |
0 |
(10.6) |
1 |
(19.7) |
3 |
(27.7) |
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(d) Capital Transactions with Foreigners |
0 |
0 |
0 |
0 |
0 |
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Economic Freedom Rating |
2.5 |
2.5 |
2.7 |
3.3 |
4.4 |
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Ranking of Country |
92 |
97 |
95 |
91 |
78 |
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Part 2: Recent Economic Indicators: |
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Population 1996: |
18.0 |
Real Per Capita GDP |
: |
1996= |
$1,433 |
||||
(in millions) |
(in 1995 U.S. dollars) |
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Annual Rate of Change (1985-96): |
3.2% |
Avg. Growth Rate: |
1980-90 = |
-1.2% |
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1990-96 = |
1.3% |
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Economic Indicators:* |
1988 |
1989 |
1990 |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
Change in Real GDP: Aggregate |
5.6 |
5.1 |
3.3 |
5.3 |
3.9 |
5.0 |
3.8 |
4.5 |
5.2 |
: Per Capita |
2.4 |
1.9 |
0.1 |
2.1 |
0.7 |
1.8 |
0.8 |
1.5 |
2.2 |
Inflation Rate (CPI) |
31.4 |
25.2 |
37.3 |
18.0 |
10.1 |
25.0 |
24.9 |
59.5 |
41.0 |
Change in Money Supply: (M1) |
45.0 |
52.7 |
10.8 |
7.7 |
53.0 |
27.9 |
50.3 |
33.4 |
- |
: (M2) |
46.4 |
54.8 |
13.5 |
17.3 |
52.2 |
26.4 |
45.7 |
40.4 |
34.0 |
Investment/GDP Ratio |
10.9 |
13.5 |
12.3 |
12.7 |
12.9 |
22.0 |
- |
- |
- |
Size of Trade Sector (% of GDP) |
21.4 |
20.7 |
19.7 |
19.7 |
21.4 |
27.7 |
27.7 |
- |
- |
Total Gov't Exp./GDP Ratio |
13.7 |
13.9 |
13.7 |
14.4 |
18.2 |
21.5 |
23.4 |
23.3 |
23.2 |
Central Government Budget |
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Deficit (-) or Surplus (+) |
|||||||||
As a Percent of GDP |
+0.4 |
+0.7 |
+0.2 |
+1.6 |
-5.2 |
-3.2 |
+2.3 |
+0.7 |
-1.0 |
Unemployment Rate |
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* The figures in this table are in percent form. |
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Throughout most of the last two decades, the economy of Ghana was one of the least free in the world. In 1985 it ranked 95th out of the 107 countries that were rated. There has been modest improvement during the 1990s. In 1995 Ghana ranked 78th among the 115 countries in our study.
The recent improvement is primarily the result of lower marginal tax rates and some liberalization of international trade. The top marginal tax rate was cut from 60% in 1985 and 55% in 1990 to 35% in 1995. Taxes on international trade are now approximately half the level of 1975-1985 and exchange rate controls have been liberalized substantially since 1985. As the result, the international trade sector as a share of GDP is now more than twice the levels of 1980 and 1985.
Much more needs to be done. During the last five years, monetary expansion has averaged 34% annually. The predictable side effect—a high and variable rate of the inflation—continues to undermine the confidence and planning of decision-makers. Trade restrictions continue to retard international exchange and the mobility of capital. Foreign investors must obtain approval from the Ghana Investment Center prior to undertaking a project; otherwise they will not be permitted to remit returns from their investment. Price controls continue to be imposed on various products and the legal system provides political officials with a great deal of discretionary authority to intrude and limit business activity. Policies of this type must be scrapped if this poor country is going to develop.
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| Last Modified: Wednesday, October 20, 1999. |