Structural transformation in any country is associated with high growth and increased living standards. This is also true for Ghana. Structural transformation refers to the transition of an economy from low productivity economic activities that are labour intensive to high productive activities that require skills. Many countries bring structural change by expanding the manufacturing sector. However, Ghana has not followed the traditional path. In Ghana, the high-productivity services are bringing the structural transformation. After 2005, the employment composition in the country drastically changed. The people have shifted away from the agricultural sector towards the service and the manufacturing sector. In addition to that, mining and quarrying also became an essential part of the people. The result was a divergence of employment patterns in Ghana.
Structural Transformation And Productivity Growth In Ghana
Previously, the major structural change happened due to the shifting of employment opportunities from agriculture to the manufacturing sector. However, later high-productivity services, particularly the export-oriented services which are fulfilled via YunExpress, China Post, and other logistic companies, made major contributions in bringing the structural transformation.
Even though the export-oriented services play a greater role in the structural transformation, it has not been able to prove itself as a significant creator in the country. This is particularly true for the low and middle-skilled workers of the country. Due to their demand for highly-skilled workers, the high-productivity services have a meager employment rate. Interestingly, the majority of the employment opportunities in the country have come from low-productivity services. This has made the low-productivity services a driver of productivity growth but not structural transformation.
Growing Structural Transformation In Ghana Since 2005
Since 2005, the people of Ghana have become interested in the service and the manufacturing sector. This drove people away from the agricultural sector, and further, extractives became of prime importance for the country. During the initial time, most jobs came from trade services and other services, including mining and quarrying. As discussed above, most of the employment growth came from the lower productivity subsectors of the country. Interestingly, the pattern changed during the period 2010-2018. During this period, employment in the other services declined, and that of trading services, manufacturing, and government services increased.
However, this structural transformation has not been the same across the country. The cities of Ghana experienced the fastest structural change. Even though the country’s structural change has been rapid, its contribution to growth has proven to be limited. It is because low productivity services in the country are associated with more job creation. The high-productivity services are associated with low job creation. It is vital for Ghana now to ensure that the high productivity services are associated with high job creation too. It is only through skill-building that a transfer from agriculture to high-productivity services or from low-productivity services to high-productivity services can be ensured.
In the past few years, manufacturing services have again become necessary. Ghana need not choose between the manufacturing sector and the high productivity services. It is because most of the time, they are intertwined. As a result, boosting one industry will result in mutual growth of both sectors. Service competitiveness plays a critical role in the development of both sectors. If not in both, at least one sector should engage in service competitiveness for growth.
What Does High-Productivity Services Bring With Itself?
Even though employment in the high-productivity services has been limited, it brings significant benefits. This is why the high productivity services are contributing to structural change in the country. The high productivity services employ highly-skilled people and reward them with handsome salaries. Further, the employment conditions in these services are better than in the manufacturing and other sectors. Hyper-productivity services can only contribute to economic growth when in addition to high-skilled jobs, they can also create low and middle-skilled jobs too.
Structural transformation in Ghana in the recent past years is impressive. It is now time to focus on bringing an economic transformation through high-quality jobs and better productivity growth. Economic change is only possible when people shift from low productivity services to higher productivity services. However, for this, it is vital to enhance the skill of the workers. In addition, digital adoption in different sectors is recommended to bring faster innovation, better productivity, and higher economic benefits.
