identify the issue

• Human Development index
• Multidimensional Poverty Index

Case Study 5 Institutions, Inequality, and Incomes: Ghana and Cote d'Ivoire hana's development has exceeded expecta- and hunger, and to achieve the other Millennium Itions-at least after many disappointments. Development Goals? Cote d'Ivoire (CIV) started with many apparent ad- The experiences of a half century after inde- vantages, but on many economic measures, Ghana pendence illustrate some of the opportunities for has closed the development gap that existed be- and threats to development. This case study raises tween itself and CIV at independence thought-provoking questions and presents the types It is recommended to read Chapters 2 and 5 in of information one would weigh in addressing this conjunction with this case. These country illustra- and other comparative country studies. This case tions provide further interpretation of the more illustrates how the frameworks and many-country general research discussed in those chapters. statistical studies of Chapters 2 and 5 can be applied to understanding development experiences in com- A Natural Comparative Case Study parative perspective. The richness of culture and nu- Ghana and Cote d'Ivoire (CIV) border each other ances of complex political histories are abstracted to in West Africa. Their land area is similar in size at feature some broad approaches and findings in de- 92,456 square miles (239,450 km-) and 124,502 velopment economics in a short space. Readers are square miles (322,458 km-), respectively. Their encouraged to explore these leading African nations populations are also similar, with 23.8 million in detail. people in Ghana and 21.4 million in Cote d'Ivoire in 2009. Becoming independent within three Poverty and Human Development As reported in years of each other and also sharing similar geog- the UNDP's 2009 Human Development Report, raphies, these adjoining countries make for a nat- Ghana is considered a medium human devel ural comparison. One of the most striking differ- opment country, with an HDI of 0.526, while Cote ences is that Ghana was part of the British d'Ivoire is considered a low human development Empire from 1821 to 1957, and Cote d'Ivoire was country with an HDI of 0.484. In the 1990 report, a French colony from 1842 until 1960. (Note how- when the HDI was introduced, the numbers were ever that full colonial rule took a long time to be- 0.393 for CIV and 0.360 for Ghana. Both made come established throughout the territories of progress, but Ghana much more so. On the new these countries; the French were still fighting to HDI introduced in the 2010 report CIV ranks extend their presence into the early years of the 149th (at 0.397), while Ghana ranks 130th (at 0.467). twentieth century.) And the 2009 HDR Human Poverty Index (see How did these colonial histories matter? Did note 11) for Cote d'Ivoire was 0.374, ranking 29 their influences extend after independence, affect- places lower in the country rankings based on ing later development policies for good or ill? Or human poverty than income poverty (the fraction have other, internal factors been more decisive? Can under $1.25 per day). This suggested that what this help us to better understand why it is so chal- the UNDP termed human poverty is relatively lenging to sustain high growth, eliminate poverty worse in CIV than even its income poverty would 250suggest. Ghana's HPI was significantly better, at patterns of development can have long historical 0.281 (with its ranking as predicted by its income roots, and we consider this first. poverty). The UNDP's new Multidimensional Poverty Mea- Factors in Comparative Development sure Index (MPI) is even more revealing. Ghana's The Colonial Impact and the Legacy of Institutions MPI is 0.140, giving it a ranking of 57, which is the The Portuguese built a fortress on the coast of same country ranking that Ghana holds on the frac- Ghana in 1482 and named it Elmina ("The Mine"). tion of population living on less than $1.25 a day. In Later, the British named this area the Gold Coast, as contrast, CIV's MPI rank is much lower at 78 with a it was known until independence in 1957. Cote value of 0.320-more than double the level of d'Ivoire (Ivory Coast) received its name from the Ghana-and substantially worse than predicted by French. These names apparently reflect how the CIV's income poverty ranking. CIV is about halfway colonial powers viewed the territories: as "coasts" between the best performer (Slovakia and Slovenia at rather than nations; as commodities for trade rather 0.000) and the worst performer (Nigeria at 0.642); but than people, or simply as a mine. The colonialists Ghana's score is well under a quarter of the way from priority of resources over people could not have no poverty to the poverty level of Niger. been more obvious. Ghana suffered earlier and These outcomes would have surprised many more from the impact of the slave trade. But Cote who wrote at the time of independence. In 1960, d'Ivoire also suffered ill treatment, including a bru- Ghana had a real GDP per capita of just $594, far tal campaign by the French to subdue the "interior" behind Cote d'Ivoire's $1,675; but in 2007 accord- in the late nineteenth and early twentieth centuries ing to the Penn World Table, Ghana had reached and impose forced labor. How do we understand $1,653-a gain of 278% and nearly enough to this terrible colonial experience and its possible af- close its original deficit-while CIV increased to termath? Settler mortality was stunningly high in $2,228, a modest gain of just 33% after 47 years. these two countries, each with an estimated 668 Ghana has reached current parity with CIV on deaths per 1,000 per year, among the highest in the life expectancy; in 1960, life expectancy in CIV study of Acemoglu, Johnson and Robinson (AJR); was 51 to Ghana's 46; but in 2007, each had a life for comparison, the rate was just 15.5 in South expectancy of 57. In 2008, under-5 mortality was Africa. (Conclusions of research citied here are 114 in CIV and a still high but significantly lower based on multi-country statistical analysis not on 76 in Ghana. Aysit Tansel shows that by 1987, case studies; we are taking such research as a start- Ghana was well ahead of CIV in mean years of ing point for issues to consider when conducting schooling by each gender and across age groups. more in-depth comparative case studies). Today the adult literacy rate is 65.0% in Ghana versus 48.7% in CIV. Highly credible information Institutional Quality on the extent of extreme poverty in these coun- The expectation is that inherited institutions should tries is difficult to find, but it is not doubted that be particularly bad in these two countries because at the time of independence, poverty was far colonialists would have had little incentive to higher in Ghana. Using 1987 surveys, the World protect property rights, encourage investment, or Bank put dollar-a-day poverty at just 3.28% in allow broad access to economic opportunities or CIV that year but 46.51% in Ghana; as of 2010, its political participation; instead, in stark terms, the most recent comparable figure for Ghana (from a incentive was to steal or have others steal for you. 1998 study) is 36% and for CIV (2002) is 16%. It appears that over time, poverty has fallen in "According to the AJR dataset, which is based on the work of the historian Ghana and risen in CIV. Progress in both coun- Philip Curtin, the other highest-mortality colonies were Togo, Gambia, Mali, and Nigeria. By contrast, the death rate was just 14.9 in Hong Kong, tries is small in comparison to East Asia; but the and 17.7 in Malaysia and Singapore. (Settler mortality is well-established differences between these countries are signifi- as an instrument for early institutions, and we examine two countries cant. How can we begin to understand such dif- with identical settler mortalities giving attention to additional elements.) Some observers view CIV as having a more dependent relationship with ferences? Sometimes even recent changes in the France, while Ghana diversified more its international relations. 251