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Tuesday, May 24, 2022

Will economy impact Ghana’s presidential elections? [Article]

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For some, the state of the economy matters most when it comes to presidential elections, perhaps more important than tribe and ethnicity.

Electoral wins could be down to luck. Research has found that the economy matters less when the race for the presidency is wide open as seen in the just ended presidential elections in the United States.

However, around the world, the timing and direction of economic growth or decline cannot be overlooked as a good indicator of presidential outcomes. Even in the United States, an analysis of the voter patterns shows that the states with rising unemployment voted for the then leader of opposition party which is now the president-elect.

For most economists, policy researchers and analysts, the most common way to evaluate presidents is simply to look at how well the economy did while they were in office.

If the state of the nation is well, the president must have done a good job. If it struggled with a high rate of joblessness, underemployment, low wage growth, high inflation or slow growth, he must have failed. This assertion may possibly be true in the political ambiance in Ghana.

In Ghana, many pundits focus on other non-economic variables when it comes to the presidential contest.

But, history shows that the state of the economy may have an impact on the voters’ decision— the path of economic growth or trend in economic performance during a presidential term of office has a relationship with electoral wins. Interestingly, in the past 6 presidential elections in Ghana excluding the period before the 1992 and 2008, if the real GDP decline consecutively and considerably during a government term office, the party in power lost, and vice versa.

Notwithstanding, aside the state of the economy, corruption, a candidate’s personal attributes, tribe and campaign strategies have an impact on a presidential race.

The only contention is which of the variables—both economic and non-economic has the most impact on electoral outcomes.  Although, there is an extensive research examining economic performance on electoral outcomes, the extent of impact has been difficult to measure with any reliability.

Using real GDP growth data over 24years thus starting 1992 where presidents are elected through a general election, I analyze changes in Ghana’s real GDP growth for a presidential term.

I ignore the magnitude of the change, that is—the degree to which the economy improved or declined. The approach is simple and unadventurous thus devoid of any econometric or statistical specification.

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Take a look at the above table, the real GDP declined from 1998 to 2000 and there was a party change. The average change in GDP growth over the 4 years throughout the presidential office term from 1996 to 2000 is minus 0.2%.

The economy constantly improved year-on-year from 2000 to 2004. There was no change in government in the 2004 presidential elections. Now, the economy continued to improve from 2004 to 2005, dropped from 6.3% in 2006 to 4.3% in 2007. There was a change in government during 2008 presidential elections. The economy bounced back in 2008 and declined significantly in 2009 mainly due to the world financial crisis of 2008/2009. The economy sprung back strongly after the economic and financial crisis of 2008/09.  Ghana’s economy grew from 4.8% in 2009 to 14% in 2011 on a year-on-year basis. There was no party change in the 2012 elections.

Since 2012, the economy has declined continuously and is only expected to improve in 2016 based on the GDP forecast. Is it due to policies or forces beyond the control of the government? The average change in year-on-year GDP growth for the 4 years beginning the year 2012 to 2016 is expected to be negative 1.5%.

Take a look again at the table, within the past 6 general elections under the 4th republic, the only period in which economic performance went on a declining trajectory before a general election was the period 1998 to 2000.

The sitting government lost the elections in 2000. The year 1999-2000 was characterized by high rates inflation caused by a combination of factors—exchange rate depreciation and external shocks. Similarly, the period 2012-2016 has been characterized by high inflation, ballooning government debt, and external shocks such as weak commodity prices on the international market resulting in sluggish economic growth. The rate of decline of economic performance since 2011 is unprecedented. With the IMF projecting 2016 year-on-year real GDP to be 3.3%, the real GDP growth rate will contract by 10.7 percentage points within the period 2011 to 2016. This is alarming!

Now, one may argue that GDP is not a good measure of well-being and prosperity which is one of the major gauges of voter sentiments in developed countries and democracies such as Ghana. For example, economic growth measured by the GDP ignores changes in quality of life, such as access to clean water and traffic congestion.

Notwithstanding, it’s relevance during a 4-year presidential office term in determining a president reelection must not be understated. Voters may be regarded as rational and forward-looking and could be enthused by assuming that good economic performance over a president’s office term means better government. Further, voters may attribute better macroeconomic performance, at least to some extent, to the functioning of their government. Likewise, an incumbent may use good economic performance to drum up support for reelection. On the other hand, the opposition parties may take advantage of a successive weakening of the economy to make case to voters for their reelection.

The finding of some correlation between the trend in economic performance during a leader’s term in office in Ghana and his reelection prospects is not surprising. Economic performance during a president’s term in office is thereby one of the solicitous ways to grade Presidents and assess future Presidents rather than assessing them by how the economy fared in the election year relative to the previous year.

This finding is supported by research—voters are affected by the growth over a leader’s term in office rather than in the election year itself in less developed countries. The results must be seen as informative and indicative, not conclusive. It only advances to the debate about the nature and timing of electoral judgements and choices in the country. The community and ethnic based politics coupled with high illiteracy have left little room for the electorate to evaluate parties on issues about the economy.

To conclude, electoral wins could be down to luck. Research has found that the economy matters less when the race for the presidency is wide open, as it will be in the upcoming elections. But, I would recommend making good policy the ultimate decider in the forthcoming elections.

As we approach the 2016 elections, what is important is that the fundamental issues. Let us examine a government’s capability of ensuring job creation, low inflation and overall prosperity of the average Ghanaian.  Yes, as voters, we desire our economic short term interest but don’t get carried away by brazen appeals. Let’s give a careful thought to all the economic policies they are throwing at us. May we vote for our prospective candidate based on who can uplift the quality of life of the citizens, eradicate the extreme poverty in the country, and secure the prosperity of the future generation.

By: Eric Kofi Kontoh

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