Friday, November 5, 2010

Ghana no longer in the poor country category

A tweet from Todd Moss: "Ghana suddenly no longer poor. GDP rebase puts per cap GDP at >$1300. Bye-Bye IDA. "

Basically, they adjusted the prices and weights assigned various sectors of the economy. The weights hadn't changed since 1993, but banking and ICT have become much more important parts of the economy since. As a result of the changed weights, GDP per capita is now calculated at $1,318 while the old weighting said it was only $753. Ghana's loans have already gotten cheaper.
Standard Chartered's Razia Khan noted the re-basing would automatically make deficit and debt levels appear more benign but would also mean its tax revenue collection as a ratio of GDP would slide below the average for sub-Saharan African countries.
The rebasing also changes how we understand the structure of the Ghanian economy. Services are now more important (>50% of GDP) than agriculture (30%).

Now the big money question: does this change poverty? If poverty data is based on household surveys, no. If your poverty measure is based on GDP per capita and inequality data, yes. FAO's hunger data, for instance, is based far more on the latter approach. There have been fewer hungry people in Ghana than we believed.

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