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Modeling growth options and structural change to reach middle income country status: The case of Ghana

  • Breisinger, Clemens
  • Diao, Xinshen
  • Thurlow, James

This paper develops a recursive dynamic computable general equilibrium (DCGE) model to evaluate sources of accelerated growth and structural transformation. It goes beyond stylized and aggregate general equilibrium models by examining country-specific growth options to reach middle income country (MIC) status. We first examine a set of countries that have successfully transformed their economies to inform model and scenario building. We then simulate potentials and trade-offs of selected sector- and factor-specific growth paths for Ghana. Results show that no individual sector's growth acceleration is sufficient for Ghana to reach MIC status by 2015. Manufacturing growth is constrained by its high dependency on agricultural inputs indicating the need for diversification. Services can support rather than drive economy-wide growth. Agriculture must remain the mainstay of economy-wide growth. While this will delay structural change in sectoral composition, it demonstrates that emphasizing agriculture is a viable option for some countries to reach MIC status.

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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 26 (2009)
Issue (Month): 2 (March)
Pages: 514-525

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Handle: RePEc:eee:ecmode:v:26:y:2009:i:2:p:514-525
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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  2. Echevarria, Cristina, 1997. "Changes in Sectoral Composition Associated with Economic Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 431-52, May.
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  15. Hertel, Thomas & David Hummels & Maros Ivanic & Roman Keeney, 2003. "How Confident Can We Be in CGE-Based Assessments of Free Trade Agreements?," GTAP Working Papers 1324, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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