Bringing Institutional Economics to Bear in Understanding Ghana’s Performance on Multi-Stakeholder Interventions

Existing literature on Ghana’s performance on the decentralized planning system hardly explores the role of individual rationality and organizational rationality in explaining performance on development efforts. This article examines whether the proposition of the New Institutional Economics (NIE) that decisions that individuals make constitute trans-actions in which costs and debts are incurred has a bearing on the performance of institutions involved in endogenous development processes at the local level. The case study methodology was employed using two purposively selected water supply schemes in Ghana. In-depth interviews and questionnaires were used to collect primary data. Secondary data was obtained from project reports. The findings indicated that even during the pursuit of an endogenous development strategy at the local level, the performance of the local stakeholders was determined by the state of intra-stakeholder structures. This in turn, was a sum of the decisions and actions of the individual members of the entities that were the main actors (i.e. the stakeholders). The NIE’s proposition that trans-action cost is key basis for individuals’ decisions and action was clearly evident in the decisions and actions of individuals (i.e. staff of the main actors), but it also was evident in the decisions and actions of the main actors (the entities that were the stakeholders). The study recommends that key development actors and the Ministry of Water Resources Works and Housing devote more attention to researching into how internal organizational conditions affect and shape the performance of stakeholders on the systems and how the existing intra and inter-stakeholder mechanisms can be improved to foster the success of development efforts at the local level.