Policies towards poverty: Ghana and Tanzania in the 1990's
Which Households Benefited from Growth?
The top part of Figure 2 shows the levels of household expenditure per capita at the beginning and end of the decade for our four types of household: farmers, private and public wage employees and the urban self-employed. The bottom part of the Figure shows the growth rates over the decade from the data presented in the top part. As we have just shown how close to log normal are the underlying distributions we have chosen to present exponents of the means of the logs to keep the data in Figure 2 as comparable as possible with that of Figure 1.
Figure 2 shows that the level of household consumption per capita rose from US$ (1999) 379 to 420 for Ghana and from US$ (1999) 147 to 164 for Tanzania, growth rates of 10.8 and 11.6 per cent respectively. Four findings stand out. First, while the averages are virtually identical across the two countries there are very marked differences in the pattern of growth within this average both within and across the countries. Second, farmers - the poorest type of household - did least well in both countries. In fact in Ghana per capita consumption of farmers fell. Third, while in both countries wage employees did much better than farmers, they did less well than the urban self-employed in Ghana. Finally, despite the higher growth rate for the urban self-employed in Ghana their levels of per capita consumption remain below those of wage employees in both countries.
It is clear from Figure 2 that focusing on the average expenditures of the four types of household we have identified from the data that in both countries the poorest type - the farmer- grew least. Does this imply that the poorest percentiles of the distribution see falls in their per capita consumption? To answer that question we show in Figure 3 the GIC for Ghana and in Figure 4 the GIC for Tanzania. (We combine private and public wage employees to prevent the bottom figures from being too cluttered). These two Figures confirm the very important differences across the two countries. While the top part of the Figure for both countries indicates that on average there was growth across all percentiles, the bottom part of the figure shows that this was not true for farmers in Ghana.
In Ghana the self-employed do as well or better than wage employees for much of the distribution, particularly at the higher end. In contrast the self-employed in Tanzania do less well than farmers for much of the distribution and their median growth rate is close to zero.
Figure 2
Figure 3: Ghana
Figure 4 : Tanzania
There are also important differences across the countries in the pattern of the growth rate for wage employees. In Tanzania there is a general pattern for wage growth to rise as we move up the distribution. In fact after the 30 th percentile wage increases reach nearly 40 per cent. There appears some evidence that not only are wage earners in Tanzania doing relatively well over this period but that the larges gains are being made by those relatively well off.
Finally we note how low are these figures when compared with a rapidly growing economy such as China. Ravaillon and Chen (2003, p.) present a GIC for Chinese income per person. The median growth rate is 5.5 per cent per annum which compares with about 12 per cent per decade for Ghana and Tanzania. China’s income grows every two years by the amount Ghana and Tanzania’s grow every decade. While the analysis has identified important differences in the pattern of growth within these economies the important common factor is that growth is far too low to have any major impact on poverty in the next decade or so.