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Economic Change in Ghana, 1987-2006

Economic Change in Ghana, 1987-2006. Chris Udry Yale University. Goal: document trends in entrepreneurship and employment in preparation for Ghana panel survey and associated interventions Ghana LSMS 1987 through GLSS 2006; 5 rounds of comparable cross-sections 4,000 – 7,000 households.

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Economic Change in Ghana, 1987-2006

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  1. Economic Change in Ghana, 1987-2006 Chris Udry Yale University

  2. Goal: • document trends in entrepreneurship and employment in preparation for Ghana panel survey and associated interventions • Ghana LSMS 1987 through GLSS 2006; 5 rounds of comparable cross-sections • 4,000 – 7,000 households

  3. Trends in Ghana

  4. Significant growth over 2 decades • Marked decline in poverty • Dramatic increases in education • Urbanization • Health improvements, decline in birth rates • What changes do we see in economic activity at the micro level? • New enterprises? • Enterprise growth? • Increased specialization?

  5. Gradual Change in Primary Occupation

  6. Gradual fall in Self-employment

  7. Look at Investment patterns:Household Asset Portfolios, 1992

  8. Declining share of business assets

  9. For business owners, as well

  10. Enterprises are not growing

  11. Nor are they growing in terms of capital:

  12. Evidence on Returns to Capital • Farm profits in new technology • Prices • Enterprise profits

  13. Prices of durable goods • Prices of goods with varying life expectancies contain information on the discount rate

  14. Can estimate this with data on prices and t (assuming measurement error in t) – used parts example • Using this relationship, we estimate r=60%

  15. NFEs earn high returns, particularly at low levels of K.- warning: sensitive to assumptions on w

  16. Are business starts dependent on wealth?

  17. Are commercial enterprises growing less, or not being started, due to capital constraints and risk? • Experimental intervention associated with EGC surveys discussed earlier • Driven by theory: role of risk and imperfect access to K on investment choice. Goal is to quantify effects of risk/risk aversion and capital market imperfections on investment choice

  18. Not a policy evaluation; insurance is to be free • Working with MIA to design an insurance product to address most salient dimension of risk of commercialization. Crop price or rainfall, likely rainfall for intensive maize. • 2 x 2 design with grant experiment • Sample of 500 farmers in high potential maize areas

  19. Combine with data collection on expectations, and prospective uses of additional funds • Simultaneous orthogonal evaluation of large-scale commercial training program for farmers

  20. Annual Hours Worked

  21. Labor Force Participation by Gender

  22. Net effect, increase in work/capita

  23. No increase in specialization:

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