Policies towards poverty: Ghana and Tanzania in the 1990's
Introduction
In both Ghana and Tanzania reports based on representative samples of households have shown that poverty fell in the 1990s. The Tanzanian Household Budget Survey 2000/01 used surveys from 1991 and 2000, nearly a decade apart, National Bureau of Statistics (2002). In Ghana there have been four households surveys carried out over the period from 1987/88 to 1998/99, Ghana Statistical Service (1995, 2000). The reports provide profiles of the correlates of poverty at a point in time and some comparisons over time. We use the data drawn from these surveys to compare how the fall in poverty was effected in the two countries. Both countries are regarded as relatively successful reformers over the 1990s with the reform process in Ghana under way from the mid 1980s. Comparing the two countries offers the opportunity to see if the processes of poverty change were similar and what we can learn about policy outcomes for the poor. From existing research we know that income opportunities for people living in developing countries are determined by a range of factors which include whether individuals have wage or non-wage opportunities, the income opportunities from self-employment, whether they live in rural or urban areas and the level of education attained [1].
In this project we seek to identify some of the paths by which households may have exited, and entered, poverty. As the samples are representative surveys, not panels, we cannot ask which individuals escaped poverty, we can however ask which types of household escaped poverty. We do this by two methods. First we show how averages of household per capita consumption changed over the decade for both countries for four classes of household: farmers, the urban self-employed, private and public wage employees. Second we use the growth incidence curve (GIC) as in Ravaillon and Chen (2003) to ask how the poor within each of these household types benefited from growth. The declines in poverty reported for both Ghana and Tanzania are based on averages across these households. By our decomposition we can show how this varied across types of household.
As will be apparent from the analysis of our data wage employees and the urban self employed not only have much higher levels of expenditure than farmers, they also saw substantially greater increases in expenditures than farmers. Thus one possible path out of poverty is that there is a relative expansion of urban based employment opportunities. A prominent concern with policies of trade liberalisation in Africa has been that it will lead to a decline in employment in the traded manufacturing sector. While we do not link our data with the traded sector we do seek to show how income growth was divided between shifts between types of household and the differential growth rates across household types. We do this by means of a simple decomposition:
[1] 
where 
is average expenditure per capita at time 
, 
is the proportion of households of type 
, and 
is the average expenditure per capita at time 
of household type 
. We can express the changes in expenditure per capita over time as:
[2] 
This identity enables us to assess the relative importance of movement between occupations and of rises within an occupation as the source of growth in the economy. We term the first part of the expression 
the change in expenditure, the second part 
the change in proportions and the third part 
the interaction effect. By definition the average growth rate across the households is the sum of these three components.
In the next section we show how the average level of household consumption per capita in the two economies grew over the decade of the 1990s. Following that we ask which types of household benefited most from this growth. The issue of the decomposition is taken up in the penultimate section. A final section summarises the findings.
[1] This list is not intended to be exhaustive. Much attention has focused on whether households have access to, or can acquire, assets in the form of land or finance, and their ability to withstand shocks. We do not investigate these dimensions of escaping poverty in this paper.