Background

Imagine that you work for the World Bank and you have been called to Ghana to aid the new president to come up with a new international trade strategy.

You are told that the new government is interested in moving away from agriculture and into manufacturing. To do so, the government wants to pursuit a policy of import substitution industrialization (ISI).

You are given a brief about Ghana highlighting the following points:

About half of Ghana's population depends on agriculture, but Ghana still imports some of its food.

The majority of Ghana's people live in rural areas and exist on a subsistence way of life.

Ghana has one of the highest rates of income inequality in the world.

Nearly half of the population is employed in agriculture.

Question 2: Explain if the VER is likely to improve the average efficiency of Ghana's farms?

Question 3: After a meeting with Ghana's president you learn that the government is also interested in repatriating migrants that went to European countries to study engineering a decade ago. Explain how this is likely to change Ghana's comparative advantage.