Publication: All that Glitters is not Gold: Polarization Amid Poverty Reduction in Ghana
Loading...
Files in English
279 downloads
Published
2018-02
ISSN
0305-750X
Date
2018-01-25
Author(s)
Editor(s)
Abstract
Ghana is an exceptional case in the Sub-Saharan Africa (SSA) landscape. Together with a handful of other countries, Ghana offers the opportunity to analyze the distributional changes in the past two decades, since four comparable household surveys are available. In addition, unlike many other countries in SSA, Ghana’s rapid growth translated into fast poverty reduction. A closer look at the distributional changes that occurred in the same period, however, suggests less optimism. The present paper develops an innovative methodology to analyze the distributional changes that occurred and their drivers, with a high degree of accuracy and granularity. Looking at the results from 1991 to 2012, the paper documents how the distributional changes over time hollowed out the middle of the Ghanaian household consumption distribution and increased the concentration of households around the highest and lowest deciles; there was a clear surge in polarization indeed. When looking at the drivers of polarization, household characteristics, educational attainment, and access to basic infrastructure all tended to increase over time the size of the upper and lower tails of the consumption distribution and, as a consequence, the degree of polarization.
Link to Data Set
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication All that Glitters Is Not Gold(World Bank, Washington, DC, 2016-07)Ghana is an exceptional case in the Sub-Saharan Africa landscape. Together with a handful of other countries, Ghana offers the opportunity to analyze the distributional changes in the past two decades, since four comparable household surveys are available. In addition, different from many other countries in the continent, Ghana's rapid growth translated into fast poverty reduction. A closer look at the distributional changes that occurred in the same period, however, suggests less optimism. The present paper develops an innovative methodology to analyze the distributional changes that occurred and their drivers, with a high degree of accuracy and granularity. Looking at the results from 1991 to 2012, the paper documents how the distributional changes hollowed out the middle of the Ghanaian household consumption distribution and increased the concentration of households around the highest and lowest deciles; there was a clear surge in polarization indeed. When looking at the drivers of polarization, household characteristics, educational attainment, and access to basic infrastructure all tended to increase over time the size of the upper and lower tails of the consumption distribution and, as a consequence, the degree of polarization.Publication Polarization and Its Discontents(World Bank, Washington, DC, 2019-10)This paper uses data obtained from three Moroccan household surveys that took place between 2000 to 2013, to address issues related to the so-called "Arab puzzle." Welfare inequalities are low and declining in Arab countries and exist against the backdrop of a growing sense of dissatisfaction and frustration. The paper hypothesizes that welfare inequality plays a role, if seen through the lens of absolute measures and notably absolute polarization. The paper argues that the relatively worse perception of poor, vulnerable, and lower middle-class Moroccan households mirrors the ongoing hollowing out of the welfare distribution process and its concentration in the tails. The results of a multi-logit regression indicate that polarization is significantly correlated to perception and, importantly, that this correlation is asymmetric. The poorer are the households, the more polarization is perceived to link negatively to the well-being of households; and the richer are the households, the more polarization will positively correlate with their perceived well-being. The results are robust to the use of classes or quintiles for ranking social groups from the poorest to the richest.Publication The Devil is in the Detail(Oxford University Press, 2019-08)The present paper, starting from evidence of low growth-to-poverty elasticity characterizing Africa, purports to identify the distributional changes that limited the pro-poor impact of the last two decades’ growth. Distributional changes that went undetected by standard inequality measures were not showing a clear pattern of inequality on the continent. By applying a new decomposition technique based on a non-parametric method—the ‘relative distribution’—we found a clear distributional pattern affecting almost all analysed countries. Nineteen out twenty four countries experienced a significant increase in polarization, particularly in the lower tail of the distribution, and this distributional change lowered the pro-poor impact of growth substantially. Without this unfavorable redistribution, poverty could have decreased in these countries by an additional five percentage points.Publication Is Inequality Systematically Underestimated in Sub-Saharan Africa ? A Proposal to Overcome the Problem(World Bank, Washington, DC:, 2022-05)In Africa, evidence on the interactions among poverty, growth, and income distribution presents a puzzle: While growth has been robust in recent decades, the growth elasticity of poverty has remained low. This suggests that inequality has dampened the pro-poor effects of growth. However, when using standard inequality measures, there is only scattered evidence of high and growing inequality in Africa outside the extremely unequal southern cone. This paper argues that inequality mismeasurement could be the main culprit responsible for this paradox: consumption-based measures miss important information at the top end of the consumption distribution, leading to underestimation of inequality. This paper proposes distinct solutions, arguing that by reevaluating the importance of distributional issues in Africa, the need becomes apparent for refreshing the research agenda on African development in such a way that the interaction between poverty and inequality becomes a core concern.Publication When the Centre Cannot Hold(Wiley, 2017-12)This paper advances the hypothesis that Nigeria is going through a process of economic polarization. The notion of polarization is concerned with the disappearance or non-consolidation of the middle class, which occurs when there is a tendency to concentrate in the tails, rather than the middle, of the income/consumption distribution. This paper uses newly available data and the relative distribution methodology (Handcock and Morris, 1998, 1999) to present new results on polarization. The findings confirm the sharp increase of polarization. Compared to 2003, the distribution of consumption has become more concentrated in upper and lower deciles in 2013, while the middle deciles have thinned. A between-group analysis shows the emergence of a macro-regional gap: while the South-South and South-West regions contribute mainly to polarization in the upper tail, households in the North East and North West zones—the conflict-stricken areas—are more likely to fall in the lower national deciles.
Users also downloaded
Showing related downloaded files
Publication Quantitative Analysis of Road Transport Agreements (QuARTA)(Washington, DC: World Bank, 2013-04-13)Road freight transport is indispensable to international economic cooperation and foreign trade. Across all continents, it is commonly used for short and medium distances and in long distance haulage when minimizing time is important. In all instances governments play a critical role in ensuring the competitive advantage of private sector operators. Countries often have many opportunities to minimize the physical or administrative barriers that increase costs, take measures to enhance the attractiveness and competitiveness of road transport, or generally nurture the integral role of international road freight transport in the global trade logistics industry. Road freight transport is critical to domestic and international trade. It is the dominant mode of transport for overland movement of trade traffic, carrying more than 80 percent of traffic in most regions. Generally, nearly all trade traffic is carried by road at some point. Therefore, the cost and quality of road transport services is of critical importance to trade competitiveness of countries and regions within countries. In fact, road transport is fundamental to modern international division of labor and supply-chain management.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Poverty, Prosperity, and Planet Report 2024(Washington, DC: World Bank, 2024-10-15)The Poverty, Prosperity, and Planet Report 2024 is the latest edition of the series formerly known as Poverty and Shared Prosperity. The report emphasizes that reducing poverty and increasing shared prosperity must be achieved in ways that do not come at unacceptably high costs to the environment. The current “polycrisis”—where the multiple crises of slow economic growth, increased fragility, climate risks, and heightened uncertainty have come together at the same time—makes national development strategies and international cooperation difficult. Offering the first post-Coronavirus (COVID)-19 pandemic assessment of global progress on this interlinked agenda, the report finds that global poverty reduction has resumed but at a pace slower than before the COVID-19 crisis. Nearly 700 million people worldwide live in extreme poverty with less than US$2.15 per person per day. Progress has essentially plateaued amid lower economic growth and the impacts of COVID-19 and other crises. Today, extreme poverty is concentrated mostly in Sub-Saharan Africa and fragile settings. At a higher standard more typical of upper-middle-income countries—US$6.85 per person per day—almost one-half of the world is living in poverty. The report also provides evidence that the number of countries that have high levels of income inequality has declined considerably during the past two decades, but the pace of improvements in shared prosperity has slowed, and that inequality remains high in Latin America and the Caribbean and Sub-Saharan Africa. Worldwide, people’s incomes today would need to increase fivefold on average to reach a minimum prosperity threshold of US$25 per person per day. Where there has been progress in poverty reduction and shared prosperity, there is evidence of an increasing ability of countries to manage natural hazards, but climate risks are significantly higher in the poorest settings. Nearly one in five people globally is at risk of experiencing welfare losses due to an extreme weather event from which they will struggle to recover. The interconnected issues of climate change and poverty call for a united and inclusive effort from the global community. Development cooperation stakeholders—from governments, nongovernmental organizations, and the private sector to communities and citizens acting locally in every corner of the globe—hold pivotal roles in promoting fair and sustainable transitions. By emphasizing strategies that yield multiple benefits and diligently monitoring and addressing trade-offs, we can strive toward a future that is prosperous, equitable, and resilient.Publication South Africa - Financial Sector Assessment(Washington, DC: World Bank, 2022-01-01)The South African financial system has weathered the shock of COVID-19 but faces growing risks emanating from a weak macroeconomic outlook. The pandemic crisis hit South Africa hard, with nonresident capital outflows accelerating and the domestic and global slowdown precipitating a6.4 percent GDP contraction in 2020. A brief period of liquidity stress was managed with new central bank facilities and a lowering of liquidity requirements; and banks proved resilient thanks to sound capital and liquidity buffers. Asset management and pension assets saw falling valuations, but redemption pressures quickly dissipated as markets stabilized. The intensification of the sovereign financial system nexus emerging from the crisis poses risks going forward, and a resurgence of the pandemic could deteriorate asset quality. Banks are resilient in the FSAP’s baseline; however, amedium-term adverse stress scenario would cause a significant decline in capital although most banks would remain sufficiently capitalized. Under stress, banks could face some liquidity gaps, particularly at very short maturities, highlighting the importance of continued close monitoring. The impact of COVID-19 on insurers has thus far been contained, but prudential rules should be strengthened to ensure the measure of capital is sufficiently robust.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.