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Simulating the Impact of the Global Economic Crisis and Policy Responses on Children in Ghana

Author

Listed:
  • Theodore Antwi-Asare
  • Edgar A. Cooke
  • Daniel K. Twerefou
  • John Cockburn
  • Ismaël Fofana
  • Luca Tiberti

Abstract

Like many countries in sub-Saharan Africa, Ghana is experiencing the impact of the global crisis and the uncertain economic outlook. Indeed, as Ghana’s economy is among the most open in Africa, it is expected that the country has been and will continue to be severely affected by the crisis, although strong export prices of its main exports (gold and cocoa) may at least partially counteract the effects associated with the crisis. The main goal of this paper is to understand the potential impacts of the 2008/9 global crisis on different dimensions of child poverty (monetary, hunger, school participation, child labour and access to health services) in Ghana and to support the policy-maker in designing the most appropriate policy response to counteract the negative effects of the crisis. As timely data are not available, a combined macro-micro economic model to predict the impact of the global crisis on children was developed. Simulations suggest that the financial crisis would increase monetary poverty and hunger across all regions of Ghana, eroding many of the gains made over the past few years. Indeed, in comparison with the year preceding the crisis, instead of a reduction of four percentage points in child monetary poverty in 2011 predicted in the absence of crisis, the simulations indicate a 6.6 percentage point increase, with a continuous increasing pattern over the period of study. The global crisis is also predicted to severely deepen hunger among children, which is simulated to increase up to 6.6 percentage points in 2011 beginning with a sharp increase already in 2009. For both monetary poverty and hunger, the impact of the crisis differs across all regions, with the Eastern, Volta and Greater Accra regions predicted to be the most affected. Children’s participation in schooling and labour, as well as their access to health services, are forecast to be much less affected by the crisis, although it is found to reverse predicted increases in enrolment and health access (with substitution toward more modern types of health services) and forecasted reductions in child labour. Finally, alternative policy options have been simulated: a cash transfer programme targeted to poor children is found to be generally more effective in protecting children than food subsidies. Indeed, with a total budget equivalent to 1% of 2008 GDP, a cash transfer – equivalent to an individual annual amount of 19.8 Cedis – would cut the predicted increase in monetary poverty by over two percentage points in 2011. Although Ghana might be in a position to rapidly implement a cash transfer programme building on the existing Livelihood Empowerment against Poverty (LEAP) programme, other interventions (or mix of policies) might be more cost-effective in the short run. A combination of a universal or regionally targeted cash transfer programmes for children aged 0 to 5 years old, together with a school-feeding programme in poorer regions, might represent an effective way to intervene quickly to improve child well-being.

Suggested Citation

  • Theodore Antwi-Asare & Edgar A. Cooke & Daniel K. Twerefou & John Cockburn & Ismaël Fofana & Luca Tiberti, 2010. "Simulating the Impact of the Global Economic Crisis and Policy Responses on Children in Ghana," Working Papers MPIA 2010-16, PEP-MPIA.
  • Handle: RePEc:lvl:mpiacr:2010-16
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    Cited by:

    1. Carmen Estrades & Cecilia Llambí, 2013. "Lessons from the 2008 Financial Crisis: Policy Responses to External Shocks in Uruguay," The Developing Economies, Institute of Developing Economies, vol. 51(3), pages 233-259, September.
    2. Luca Tiberti & John Cockburn & Ismaël Fofana, 2010. "Simulating the Impact of the Global Economic Crisis and Policy Responses on Children in West and Central Africa," Papers inwopa596, Innocenti Working Papers.
    3. Sami Bibi & John Cockburn & Christian Arnault Emini & Luca Tiberti & Ismaël Fofana & Paul Ningaye, 2010. "Incidences de la crise economique mondiale de 2008/09 et des options de la politique de reponse sur la pauvreté des enfants au Cameroun," Papers inwopa600, Innocenti Working Papers.

    More about this item

    Keywords

    Global economic crisis; child poverty; hunger; education; child labour; health; West and Central Africa; Ghana; social protection;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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