142 CLEMENS BREISINGER ET AL. Although the share of agriculture in total GDP has declined and the service


sector has replaced the agricultural sector to become the largest component of the economy in recent years, agriculture remains the most important sector for employ- ment. Agriculture continues to grow at a rate consistent with the overall economy, but its growth is not driven by productivity growth. Yields of most crops are still far below their potentials, and the level of modern technology adoption in agricultural production and processing is still extremely low. Agriculture remains highly depen- dent on rainfall: irrigation in Ghana is used on only 3 percent of total crop area, and less than 20 percent of irrigation potential is realized. In contrast, the potential for land expansion has been reaching its limits in some agroecological zones, urging a rapid shift toward productivity-led growth to transform traditional agriculture. Against this background, the Government of Ghana has chosen to make the agricultural sector a key part of its development plan. To analyze the role of agricul- tural growth acceleration for Ghana’s future development, the recursive dynamic computable general equilibrium (DCGE) model described in Chapter 2 is used for the analysis of growth options and poverty reduction. The remainder of the chapter is structured as follows. We fi rst review the structure of Ghana’s agricultural sector, including its recent growth performance. We then describe the structure of the Ghanaian DCGE model and its underlying data sources. The model results are presented for the baseline and accelerated growth scenarios, and then for the invest- ment analysis. The latter is based on country-specifi c regression analysis. The fi nal section draws together our fi ndings from the Ghanaian case study and identifi es policy options for realizing the potential for agricultural growth and poverty reduction.


Agriculture in Ghana Agriculture in Ghana accounts for more than 30 percent of GDP and three-quarters of export earnings. It employs 60 percent of the labor force. With an average annual rate of 5.5 percent, Ghana’s recent agricultural growth has been more rapid than growth in its nonagricultural sectors (World Bank 2007). Moreover, in contrast to growth in the early period (Table 6.1), the main driving factor behind the recent rapid agricultural growth is the crop subsector (excluding cocoa), the largest sub- sector in agriculture, accounting for more than two-thirds of the agricultural econ- omy. Staple crops, including maize, sorghum, rice, cassava, yams, plantains, pulses, and oilseeds, dominate this subsector. Some high-value crops, such as vegetables and fruits, are also included, but they play a relatively modest role in overall agricultural growth because they make up a small share of the sector. Cocoa is Ghana’s most important traditional export crop and has received special attention from the government in terms of fi nancial and policy supports. As


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