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Dynamics of Democracy and Development in Ghana: The debate on the developing state and neoliberalist reform

Student ID: 008273079 Fall 2013 POLS 350-02 Final Paper

Following the establishment of the Fourth Republic in 1992, Ghana has achieved a meaningful transition to democracy (Morrison: 2004). With six consecutive elections in

congruence with relatively smooth transitions of power, Ghana is considered a beacon of democratization in sub-saharan Africa. Enjoying continued political stability and passing Huntington's "Two-Turnover Test", it appears that Ghana may be emerging as a consolidated democracy (Huntington 1991: 12-34). However, stifling this success is Ghanas deficient economy development, which is marked by falling GDP per capita rates (Dadzie 2013: 130). Consequently, the strength and progress of Ghanas democracy may be held back by a weak and lagging economy. By applying the theories of Fukuyama and Inglehart and Wezle, two articles on the the nature of Ghanas development speak to the complexity of this relationship. In this respect, Ghana may shed light on the connection between democracy and development, and the question of which one heralds the other. The history of Ghanas political and economic experiences has conditioned the landscape in which todays democratic and economic development rest. As a former British colony, Ghana was the first country in sub-saharan Africa to gain independence. Following its independence in 1957, Ghana was established as a republic under the presidency of Kwame Nkrums who formed the Concentions Peoples Party (CPP). Critical of capitalism, Nkrum imposed socialist reforms which ultimately lead to the increased role of the state and its control of society and the economy. In 1966, Nkrum and the CPP were overthrown by a military coup, which ushered in a series of alternating civilian and military governments. Subsequently, the Armed Forces Revolutionary Council (AFRC) led by Flight Lieutenant Jerry John Rawlings, seized power in 1979. In 1981, Rawlings ascended to power, suspending the constitution and establishing his own quasi-military government known as the Provisional National Defence Council (PNDC). During Rawlings rule, the PNDC adopted a strategic adjustment program (SAP), which

implemented neoliberal policies of a free market economy. In 1992, Rawlings restored the constitution and lifted the ban on political parties, establishing the Fourth Republic and instituting Ghanas re-democratisation. Following the return to constitutional rule, Rawlings formed the National Defence Council (NDC) political party and won the two successive elections. President John Kufuors victory in the 2000 elections marked a milestone in Ghanas democratic development, indicating the first peaceful alternation in power from the NDC to the New Patriotic Partys (NPP). The 2012 elections ushered in the second electoral turnaround, transferring power from the NPP back to the NDC. In its platform the NDC advocated for decentralization of the state and a renewal of the Social Contract as a means for economic growth (Aggrey-Darkoh 2013). Overall, the development of democracy has lead Ghana down a path of neoliberal reform. The manifestation of political contestation and competition, along with high levels of voter turnout (about 80% in the last election) are a testament to Ghanas democratic progress (Aggrey-Darkoh 2013). However, despite common conjecture, democratisation has not necessarily lead to development. Shortly after its redemocratization in 1992, Ghana regressed from its reputation as an economic miracle in 1990 to a highly indebted poor countries (HIPC) in 2001 (Opoku 2010: 158). Since then, Ghana has achieve moderate economic growth in terms of GDP, but coinciding with this growth has been an increase in the unequal distribution of income as marked by the in GINI indices (0.33 in 1997 and 0.43 in 2006) (Dadzie 2013: 133). Ultimately, the democratic progress and political stability that began in the 1990s has been marred with developmental regression and macro-economic instability. In The Necessity of Politics, Fukuyama addresses the third wave of democratization and

how the tribulations of countries like Ghana lead to a period of political decay and democratic recession. Accordingly, he argues that political anxieties about the future of liberal democracy resulted in an erosion of democratic institutions and in some cases a return to authoritarianism. Citing a disjunction between established institutions and present needs, he argues that political decay occurs when institutions fail to adapt to changes in society. Furthermore, he declares that the degree to which countries balance the three categories of institutions, the state, the rule of law, and accountable government, determines the success of its democracy. He therefore challenges the statelessness of neoliberal reforms, claiming a market economy and economic growth rest on the institutional foundations of the state. Although free markets are a component of democracy, institutions and strong government are paramount (Fukuyama 2011: 3-18). In How Development Leads to Democracy, Inglehart and Wezles theory largely conflicts with Fukuyamas perspective on the role of the institutions in development. Championing a cultural modernization theory, the authors assert that above institutions, economic development leads to democratization. Accordingly, as an economy progresses from agricultural to industrial, and then from industrial to postindustrial, societies values change from traditional and survival and secular to self-expressive, which correlate more with democratic principles. Ultimately, the world market enables economic growth that leads to economic development marked with better jobs and education, which will enlarge the middle class, who will then press for democracy. Implicit in this progression is the claim that democracy is the most effective political system for the industrialized society. In this sense, economic development is foundational in creating cultural and societal changes that lead to the institutions of democracy (Inglehart and Welzel 2009: 1-15). Exploring the debate of neoliberal reform versus the developmental state, Darko

Kwabena Opoku implicates the the diverging perspectives of Fukuyama and Inglehart and Welzel in the article From a success story to a highly indebted poor country: Ghana and neoliberal reforms. Referencing the failure of 30 years of neoliberal reforms to foster capitalistic development in Ghana, Opokus analysis speaks to Fukuyamas perspective that institutions do matter. Comparing the economic sectors share in GDP over the course of the years of SAP, Opoku finds that mining increased, while manufacturing declined (Opoku 2010: 158). Thus, although there were structural changes that might support Inglehart and Wezles theory of modernization, ultimately these changes were more regressive than progressive. Subsequently, he notes that according to the industrial sectors share in GDP, Ghana became less industrialized as a result of the neoliberal reforms (Opoku 2010: 158). Hereby, he demonstrates that the liberalization of trade and market economy do not necessarily lead to to industrialization as Inglehart and Welzel proposed. Following this finding, he asserts that the failure of this development can be attributed to a lack of political and institutional prerequisites. Accordingly, for capitalism to benefit Ghana there needs to be an enabling environment in terms of political process and institutional support (Opoku 2010: 158). This assertion explicitly relates to Fukuyamas notion that democratic institutions, such as the state, the rule of law, and an accountable government must be in place in order for the market economy to take meaningful root in a country (Fukuyama 2011: 16). Just as Opoku highlights Rawlings ability to amass wealth to benefit regime allies and sabotage opposition-oriented capitalists, Fukuyama argues that global capitalism has generated political anxieties that lead to a systematic erosion of the rule of law, which culminated in financial crisis (Opoku 2010: 160) (Fukuyama 2011: 4). In light of this, Opoku supports Fukuyamas assertion that free-markets are not necessarily selfregulatory, demonstrating an institutional imperative in neo-liberal reform (Fukuyama 2011: 7).

Comparing the developmental experiences of Ghana and Malaysia, Richard B. Dadzie further investigates the dynamics of the states institutional capacity to engineer economic development (Dadzie 2013: 123). Dadzies argument that Malaysias economic development related to the role of the developmental state can be used to inform Ghanaian policy, falls in line with Fukuyamas perspective on institutional importance. However, by emphasizing Malaysias success in terms of its agricultural and industrial transformation, Dadzies argument also gleans towards the notions of Inglehart and Welzel (Dadzie 2013: 131). Indirectly, the developmental state regards Fukuyamas emphasis on the necessity of the democratic institutions in development. Accordingly, the notion of the developmental state asserts that state-building in terms of the creation and maintenance of autonomy and social legitimacy are crucial to development (Dadzie 2013: 124). This emphasis on state-building relates to Fukuyamas argument for the creation and maintenance of effective political institutions through the balancing of the state, the rule of law, and accountable government, which he later indicates translates into legitimacy and willingness to accept authority (Fukuyama 2011: 14). While Dadzie and Fukuyamas perspectives both underline the importance of institutional capacity in development, the activist role of the developmental state stretches well beyond Fukuyamas imperative on institutions. Fukuyama asserts that institutions, such as property rights, rule of law, and political order are the hidden foundation of the market economy (Fukuyama 2011: 13). Dadzie extends this minimalist definition, and argues for state-led market economy (Dadzie 2013: 138). Ultimately, although Dadzies support for a developmental state rests on the premise of Fukuyamas perspective on institutional capacity, it deviates on the foundational basis of the scope of institutions role in development. In respect to Inglehart and Welzel, Although Dadzies perspective deviates in both terms

of institutional scope and capacity, it does relate with respect to structural development. Inglehart and Welzel argument that modernization inherently leads to economic development directly conflicts with the notion of the developmental state, which aims to combat the negative effects that the market economy has on development. However, Dadzies argument that Malaysias economy diverges from Ghana in terms of industrialization draws on notions of Inglehart and Welzel's theory. Citing the degree of industrialization as one of the deterministic factors in the diverging degrees of Ghana and Malaysias economic development, Dadzie supports Inglehart and Welzel's assertion that structural development is the causation of economic development (Dadzie 2013: 131). Furthermore, Inglehart and Welzel's emphasis on cultural values may inadvertently support Dadzies argument for the developmental state. According to Inglehart and Welzels theory, economic development leads to a shift towards secular-rational values related to bureaucratization and centralization that could be seen to support Dadzies image of a developmental state (Inglehart, Welzel 2010: 7). Subsequently, Inglehart and Welzel assertion that the rise of the postindustrial society brings about another shift in values away from bureaucratization towards self-expression values of individual autonomy, could support the argument that the role of the developmental state is necessary until a degree of post industrial transition is achieve, in which a value shift would then support a reduction in state authority (Inglehart, Welzel 2009: 8). Although the connections between Dadzie and Inglehart and Welzel seem to diverge on fundamental basis (Dadzie championing the role of the state over neoliberal reform and Inglehart and Welzel championing modernization over institutions), support can be drawn from both arguments for importance of structural transition and industrialization in development. Given the emphasis in both articles on the developmental costs of an unfettered market

economy, it seems a strictly socio-economic approach to development is in Ghana is faulted. Although Ghana has made progress in terms of economic growth, it has yet to meaningfully translate this increase into economic development. Following the establishment of the Fourth Republic, the 1994 World Bank assessment cited Ghana as the most advanced country in Africa in regards to free trade and low tariff-based protection (Opoku 2010: 157). With respect to the neoliberal perspective, this economic liberalization should have ushered in development. However, shortly after this assessment Ghana became a HIPC, debunking and dismantling socioeconomic approaches to development. Hereby, the assessment of both authors that institutional factors outside of the market economy are significant in the development processes is sound. However, the economic success of industrialization as theorized by Inglehart and Welzel and observed in Malaysia by Dadzie indicates that socio-economic factors are still salient. Therefore, it would be reasonable to argue that socio-economic approaches to development in Ghana must be supplemented with socio-political approaches. Conjoining the theories of both Fukuyama and Inglehart and Welzel, industrialization must be mediated by institutionalization, particularly in terms of regulation and design. For Ghana this means not only translating their economic growth into the industrial sector, but also developing the capabilities of the state to promulgate and monitor this development. While in theory this seems reasonable, Ghanas historical experiences, cultural constructs, and financial constraints will largely impact its practicality.

Works Cited: Huntington, Samuel P. "Democracy's third wave." Journal of democracy 2.2 (1991): 12-34. Aggrey-Darkoh, Evans. "The Consolidation of Democracy in Ghana: The 2012 General

Elections in Perspective." Kujenga Amani. N.p., 10 Oct. 2013. Web. 13 Dec. 2013. Aryeetey, Ernest, Jane T. Harrigan, and Machiko Nissanke, eds. Economic reforms in Ghana: The miracle and the mirage. Africa World Press, 2000. Dadzie, Richard B. "Economic Development and the Developmental State Assessing the Development Experiences of Ghana and Malaysia since Independence." Journal of Developing Societies 29.2 (2013): 123-154. Huntington, Samuel P. "Democracy's third wave." Journal of democracy 2.2 (1991): 12-34. Inglehart, Ronald, and Christian Welzel. "How development leads to democracy: what we know about modernization." Foreign Affairs (2009): 33-48. Fukuyama, Francis. The origins of political order: from prehuman times to the French Revolution. "The Necessity of Politics." Profile books, 2011. Morrison, Minion KC. "Political parties in Ghana through four republics: a path to democratic consolidation." Comparative Politics (2004): 421-442. Opoku, Darko Kwabena. "From a success story to a highly indebted poor country: Ghana and neoliberal reforms." Journal of Contemporary African Studies 28.2 (2010): 155-175.