Introduction

Ghana experienced its first half-century as an independent nation in March 2007. However, the early promise of democracy combined with economic and social development that hailed the new era in 1957 led to disappointments in the first three decades of independence. While democracy has now been restored, with the peaceful transfer of one civilian administration to another in 2001, and while there has been some recovery from the earlier economic collapse, the challenge of economic and social transformation looms large.

Indeed, the last two decades have seen steady and significant economic growth in spite of considerable instability in macroeconomic performance and a growing dependence on aid and other foreign inflows. An average of 4.9% GDP growth and a per capita GDP growth of about 2.9% have been recorded for the best part of that period. While the growth performance may not be exceptional it has been significantly above average by African standards. In their study of the ‘Drivers of Change’ in Ghana, Booth et al. (2004) identify economic liberalization in the 1980s and political liberalization in the 1990s as the key factors behind the fairly decent growth performance. It is important to observe that, since 2001, the macroeconomic policy situation has improved considerably, and the environment is less subject to policy reversals and deviations from agreed policies.

But the relationship between economic growth and the most important social concern, poverty, has been unclear. The perception is that the number of people living below the poverty line has not changed in tandem.