Aid and state transition in Ghana and South Korea

Abstract

This paper examines the questions of why and how foreign assistance was utilised successfully in South Korea but less so in Ghana, with a focus on the role of aid in the process of state building and state transition in these two countries. As multiple policy makers and scholars have noted, in 1957 South Korea and Ghana shared similar levels of GDP per capita, yet South Korea then achieved rapid economic development and democracy in one generation, while Ghana suffered from slow development and a general deterioration of the standard of living. In this study I adopt a comparative historical research method to explain the divergent paths of these two countries, with a special focus on the impact of foreign assistance on state transitions. I argue that contextual factors – including the effect of the colonial legacy in each of these two regions in shaping modern states, and the specific characteristics of foreign assistance intervention – provide useful insights in explaining the differential impact of aid on state building and state transition in Ghana and in South Korea.

Keywords:

• Ghana
• South Korea
• foreign aid
• state transition
• state building

Notes

1. See, for example, Werlin, “Ghana and South Korea: Explaining Development Disparities”; Werlin, “Ghana and South Korea: Lessons”; Kalu and Kim, “State–Business Relations”; and Afesorgbor, Can Ghana Copy and Implement?

2. Chazan, An Anatomy of Ghanaian Politics.

3. Many of them were involved in gold trading with Europeans and Arabic countries.

4. For the political history of Ghana, the paper relies mainly on Boahen, Ghana; Kimble, A Political History of Ghana; and Amamoo, Ghana.

5. Such a limited state capability in controlling the periphery was the prevalent problem of traditional African states and was largely attributable to low population density. Herbst, States and Power in Africa.

6. Boahen, Ghana.

7. Indeed, the slave trade was most active in Ghana and, although slavery had been in existence for centuries, the discovery of America in 1492 further boosted the trade. The rapid growth of sugar, cotton and tobacco plantations in the south of the USA gave rise to the increased demand for slave labour. Amamoo, Ghana.

8. Ibid.

9. Ray, Ghana.

10. This expression refers to Hong Kong, Taiwan, Singapore and South Korea and is borrowed from the title of a book by Vogel, The Four Little Dragons.

11. Kohli is an important exception. In his comparative study of Korea, Brazil, India and Nigeria he provides the historical background of modern politics and states for these countries. He developed the concept of the ‘capitalist-cohesive state’ to describe the nature of the South Korean state. Kohli, State-directed Development.

12. According to fractionalisation data on South Korea, as of 1990, Koreans made up the dominant ethnic group, accounting for 99.9% of the population. Ghana, on the other hand, has numerous ethnic groups, including, as of 1983, Ewe (11.9%); Ga-Adangme (7.8%); Other Ghana (7.5%); Gurma (3.3%); and Yoruba (1.3%). The full dataset is available at http://www.nsd.uib.no/macrodataguide/set.html?id=16&sub=1.

13. Kohli, State-directed Development.

14. Leftwich, States of Development, 5 (emphasis added).

15. Van der Walle, African Economies.

16. Chazan, An Anatomy of Ghanaian Politics, 84.

17. Official Development Assistance (ODA) to Ghana rose rapidly after this period, from US$40.9 million in 1973 to $190.81 million in 1980, $715.53 million in 1989, $1.4 billion in 2004 and $1.8 billion (a record high) in 2011. Data extracted from the OECD.Stat dataset.

18. In fact, Ghana sought assistance from socialist countries, including the USSR, which turned down its request and advised the country to seek help from the IFIs.

19. For more specific information on the Ghanaian ERP, see Akonor, Africa and IMF Conditionality, chap. 4.

20. SAPs refer to a set of comprehensive neoclassical economic policies designed by the World Bank and the IMF for the purpose of reforming a country’s economic structure to make more market-friendly.

21. For positive assessments of Ghanaian reform, see, for instance, Tsikata, “Ghana”; and Callaghy, “Lost between State and Market.” For less enthusiastic views, see, for instance, Killick, The Developmental Effectiveness; Killick, Development Economics in Action; Konadu-Agyemang, IMF and World Bank Sponsored Structural Adjustment Programs; and Akonor, Africa and IMF Conditionality.

22. Konadu-Agyemang and Takyi, “Structural Adjustment Programs,” 29.

23. Ibid.

24. These include an increase in the cost of living (caused by devaluation of the Ghanaian currency), a sharp rise in the unemployment rate (mainly as a result of massive cutbacks in government and the private sector), and drastic cuts in social services. For more specifics on these side-effects of SAPs, see ibid, among others.

25. Toye, “Interest Group Politics”; Dzorgbo, Ghana in Search of Development; and Leechor, “Ghana.”

26. Whitfield, “Trustees of Development.”

27. These include: top professionals in the arts and sciences; the top echelon of the military; top and eminent persons in business and commerce; senior administrators in the public and civil service, including union leaders; senior journalists; senior members of the clergy; holders of government office; senior politicians; and important traditional rulers. Akonor, Africa and IMF Conditionality, 49.

28. Haruna, “From a Developmental to a Managerial Paradigm.”

29. It was only after the mid-2000s that aid from bilateral donors increased considerably in relation to multilateral aid. The rising proportion of bilateral aid largely reflects an increase in bilateral grants after Ghana’s adoption of enhanced debt relief under the HIPC Initiative of the World Bank and the IMF in 2001.

30. Konadu-Agyemang, IMF and World Bank Sponsored Structural Adjustment Programs; and Akonor, Africa and IMF Conditionality.

31. Konadu-Agyemang, IMF and World Bank Sponsored Structural Adjustment Programns; and Akonor, Africa and IMF Conditionality.

32. Whitfield, “Trustees of Development.”

33. During the PNDC era the Ghanaian government was at times noncompliant with SAPs, mainly because of strong protests and political instability. Akonor, Africa and IMF Conditionality.

34. Jones and Sakong, Government, Business, and Entrepreneurship; and Kohli, State-directed Development.

35. This figure, however, does not include military assistance to South Korea. If this is added, the total amount of aid increases drastically.

36. For information about aid to South Korea, including the aid management system, see Kim, “Foreign Aid and Economic Development.”

37. Ibid.

38. KOICA, Development Assistance and Cooperation, 55.

39. Mason et al., The Economic and Social Modernization, 193.

40. Woo, Race to the Swift.

41. See Kim, “Foreign Aid and Economic Development,” for further discussion of South Korea’s aid management policy regime.

42. See, for example, OECD DAC, Definitions and Guidance.