Public expenditures and agricultural productivity growth in Ghana

Using district- and regional-level public expenditure data and household-level production data, this paper estimates the agricultural productivity returns to different types of public expenditure across various agro-ecological zones of Ghana. The results reveal that provision of various public goods and services in the agricultural, education, health and rural roads sectors have substantial impact on agricultural productivity. A one percent increase in public spending on agriculture is associated with a 0.15 percent increase in agricultural labor productivity, with a benefit-cost ratio of 16.8. Spending on feeder roads ranks second (with a benefit-cost ratio of 5), followed by health (about one hundredth of the value). Formal education was negatively associated with agricultural productivity. The estimated marginal effects and returns differ for the four agro-ecological zones. Implications are drawn for prioritizing additional or future public resources.