History Other / A Comparative Analysis Of Ghana And Malaysia With Respect To The U.K.
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Autor: anton 15 November 2010
Words: 2050 | Pages: 9
Half a century ago, the Republic of Ghana and the Federation of Malaysia had a lot in common. Though in different parts of the world, they both had been colonies of the United Kingdom and neither gained their independence until 1957. While both nations possessed a mix of resources that should have bestowed them with prosperity, they both started off on an "economic par" Ð’â€“ meaning both were equally poor and equally dependent on the export of raw materials. Today, the two nations have very little left in common. While Ghana is still one of the poorest developing nations in the world, Malaysia has established a thriving, industrialized economy. In this comparative analysis, I will attempt to explain the factors that have caused a divergence in the countries' economic development. I will argue why Ghana is still at the bottom of the barrel and what the nation needs to do to catch up with Malaysia, its once-counterpart. Specifically, I will focus on geographic location, stability of government, human capitol, the role of local citizens, and economy diversification.
The Republic of Ghana (formerly known as the Gold Coast) is a nation in West Africa. It is bordered by CÐ“Ò‘te d'Ivoire to the west, Burkina Faso in the north, Togo to the east, and the Gulf of Guinea creates its southern coastline (Wikipedia contributors). The lack of cooperation and the sometimes hostile relationships between the former European colonies during the early years after independence failed to generate a favorable investment and commercial environment for the nations concerned in West Africa. Furthermore, there is no power in West Africa that could act as an economic catalyst to surrounding nations in the region. Nigeria, the dominant country in West Africa, has not prospered in economic development. Recent conflicts in the Ivory Coast, Sierra Leone, and Liberia have damaged economic performance in the region. It would be in these nations' interest to effectively cooperate with one another in order to promote the economic development of the area and create a unified market.
The Federation of Malaysia is a country in Southeast Asia. It consists of two geographical regions divided by the South China Sea. West Malaysia on the Malay Peninsula shares a border on the north with Thailand and is connected by the Johor Causeway and the Tuas Second Link on the south with Singapore. East Malaysia occupies the northern part of the island of Borneo, bordering Indonesia and the Sultanate of Brunei (Wikipedia contributors). The thriving performance of the Malaysian economy is clearly linked to surrounding nations in the East Asia region. For over thirty years, the economic growth in East Asia has been swifter than any other region in the world. Malaysia has benefited from close association with regional economic powers such as Japan, Taiwan, South Korea, Singapore, and Hong Kong. With the help of more industrialized nations, Malaysia was able to build a strong industrial and manufacturing sector. Much like other countries in the region, Malaysia converted itself into an export-based economy. This made it easier for the nation to attract foreign investors from outside the region because no one wanted to be left out of the region's growing economy with a large and expanding market potential (Creffield 1990).
After gaining independence in 1957, both Malaysia and Ghana inherited British political structures from the United Kingdom. However, the political direction of each nation was in limbo. Even though Malaysia looked less promising at first due to the threat of communism and tension between racial groups, the nation has been able to enjoy political stability since gaining independence (Creffield 1990). On the other hand, Ghana has been plagued by several rebellions.
Ghana was the first nation in black Africa to escape colonial rule. On July 1, 1960, the nation became a republic with Kwame Nkrumah winning the presidential election. Soon after, he was appointed president for life. Nkrumah's Convention People's Party became the sole party in the country. Over time, heavy financial burdens set off increasing opposition to Nkrumah within the party. When Nkrumah visited China in 1966, the military, led by General Ankrah, staged a rebellion, overthrowing the Convention People's Party government. It was the beginning of several major rebellions that would haunt the nation for years to come (Asaire and Staten 1993).
Malaysia is a multiracial country made up of three main races. The Malays, who are considered the indigenous people, make up about fifty-five percent of the population. The Chinese and Indians comprise about thirty-five percent and ten percent, respectively. Malaysia has three major communal parties. Under British supervision, the three parties formed a coalition called the Alliance Party. The country holds democratic elections every five years and the Alliance coalition has been able to hang on to power since independence (Kasper 1974). They developed a working relationship that has become the hallmark of Malaysian politics. The unique Malaysian political system has created a stable political environment that has produced a friendly economic atmosphere that attracts foreign investment and also sustains economic growth (Kasper 1974). It is important to observe that the system of government used in Malaysia is very similar to the one used in the United Kingdom. The UK is one of the most stable countries in the world and can boast the most stable economy in Europe. Similarly, Malaysia is emerging as an economic giant not only in Asia but in the world at large. It is no accident that both countries have a lot in common in terms of their system of government and the way the day-to-day business of government is carried out (Kasper 1974).
Human capital can be a major factor in the economic development of a nation. Education systems and health conditions play a critical role in the development of human capital. Investments in this area can not be put off until economic conditions are positive. The foundation of an education sector in a developing nation must be laid out early on for it to positively affect a nation's industrial growth. Education provides a way to train unskilled or low-skilled workers increase productivity. In addition, education is a wealth-distribution structure because enables the lower-class to grasp the opportunities provided by economic growth. The other part of human capital that helps to maintain the economic development of a nation is the health conditions of its labor force and of the population in general. A healthy labor force is always more productive and can contribute more towards a country's economic development efforts.
Malaysia made an intensive effort soon after gaining independence to provide primary education to as many of their children as possible (Creffield 1990). Ghana went along these same tracks. They started out by providing free primary education that was required for all. By doing this, they attempted to tackle a situation where over sixty percent of school-aged children had been unable to attend school due to their social status (Aryetey et al. 2000). Ghana later extended its free education program to secondary and higher education levels.
Both nations have made significant progress in the public health area since independence. In 1960, the life expectancies in Ghana and Malaysia were thirty-seven and fifty-two years, respectively (World Bank WDR 2000). As of 1999, the life expectancy has increased to approximately fifty-eight years in Ghana and roughly seventy-two years in Malaysia (World Bank WDR 2000). In 1960, the infant mortality rate in Ghana was one hundred forty-three per thousand infants and the Malaysian rate was about half that number (World Bank WDR 2000). By 1998, Ghana was able to cut the infant mortality rate considerably to sixty-five deaths and Malaysia was able to reduce it to eight deaths for every thousand infants (World Bank WDR 2000).
The role of local citizens can play a fairly significant role in a nation's economic development. A country that starts its development with an extensive group of local entrepreneurs is certainly ahead of the game. Malaysia, at independence, had a prosperous group of local businessmen aggressively involved in commerce. The Chinese made up this group. At the time, they composed about thirty-five percent of the population (World Bank WDR 2000). Chinese businesses had relatively simple access to a significant amount of capital in the Chinese community due to its notable rate of saving. The Chinese attitude towards saving stressed low rates of personal consumption and generated high rates of saving (Kasper 1974). This included many self-financed investments. This attitude to saving money is partially explained by tradition but also by the pressures faced by immigrants attempting to climb their way up the economic ladder (Kasper 1974).
On the other side of the spectrum, liberal immigration policies until 1969 led to massive amounts of foreign citizens residing in Ghana. In 1960, an estimated one-eighth of the population was of foreign origin (World Bank WDR 2000). The largest numbers came from African nations such as Togo, Burkina, and Nigeria. As non-citizens, it was not unusual for the population to send home profits to their countries of origin. Eventually, the Ghanaian government passed the Ghanaian Business Promotion Act which excluded non-Ghanaians from certain categories of business and restricted the conditions under which non-Ghanaians could carry on their businesses (Aryetey et al. 2000).
Economy diversification is another major factor for achieving economic progress. Both countries started off as primary goods producers for few select products. In 1958, Malaysia's main export items were rubber and tin. They comprised about sixty and twelve percent of exports, respectively (World Bank WDR 2000). In Ghana, the main economic exports were cocoa and wood, contributing about sixty-six and twelve percent of exports, respectively. In addition, diamonds and manganese each contributed roughly nine percent to total exports (World Bank WDR 2000). After independence, the Malaysian government made a strong effort to diversify not only the agricultural sector but it branched out and made great inroads into manufacturing (Pradhan 1997, 35). Rubber, which once dominated at the time of independence, has been reduced to about one percent of Malaysia's total exports (World Bank WDR 2000). The country's main agricultural export item now is palm oil. It contributes about five percent to exports (World Bank WDR 2000). Additionally, Malaysia has reduced its reliance on agricultural exports to obtain foreign earnings. Products that are manufactured seem to have overtaken agricultural products as the primary earner of national income. Due to instability, Ghana has lacked the means to diversify to an industrialized economy (Pradhan 1997, 34). To this day, the country still depends solely on agricultural exports, mostly cocoa.
Given the cumulative effects of Ghana's past economic negligence and corruption, the weakened economy has not been able to withstand a series of shocks. There have been inconsistent public policies due to frequent government changes. However, Ghana has made great strides in the last thirteen years in terms of implementing democracy and observing human rights (Aryetey et al. 2000). The country's free and mandatory education and healthcare policies are boosting the effort. The people and leaders of Ghana should be commended for sustaining the current system for the longest time in the history of the nation. The election of John A. Kufuor, an opposition leader, has led to political progress (Aryetey et al. 2000). The country is moving in the right direction by putting political structures in place that will later allow for democracy to flourish.
The deportation of one million Ghanaian workers from Nigeria in 1983 delayed any human development progress that could have been achieved (Asaire and Staten 1993). Ghana began the economic recovery program soon after in 1983. It has led to some economic stability, but due to the degree in which the economy had sunk, significant progress could take decades. This will heavily depend on the economic growth rate in coming years.
Ghana does not possess some of the natural advantages enjoyed by Malaysia. The country is not located in a region of lively growth and it is not endowed with a strong group of internal citizens that can bring significant capital into the economy. In addition, Ghana does not have a surrounding support group to assist conversion to an industrialized economy. However, Ghana's economy seems to be headed in the right direction, even if persistent economic recovery is not yet a reality. If Malaysia could trade its way out of poverty and into sustained economic growth, Ghana should be able to do so as well in time.
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