Tuesday, August 19, 2014

Finally it is being discussed (Getting rid of the Cedi and going to the Dollar)

The long term solution to Ghana's economic problems are to create a manufacturing base. This article has an excellent analysis of the long term economic problems faced by Ghana as a result of exporting only cheap raw materials and importing expensive manufactured goods in a continuation of economic patterns established during colonial rule. But, in the short to medium term the Cedi is collapsing much faster than any possible industrialization or even agricultural import substitution can possibly be implemented. One possible solution I have advocated on the basis of its success in Ecuador has been to get rid of the Cedi and adopt the US Dollar as the national currency of Ghana. Now, an economist at Yale University has also started supporting this position. While there is opposition to this position among the elite in Ghana, such a change would be overall positive for the economic situation of the country as a whole.

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