Malasya and Ghana Comparison on Development

In recent years, the average adult illiteracy rate of Malaysia is 13 percent while Ghana has about 30 percent adult illiteracy rate, more than twice that of Malaysia’s (World Bank, WDR, 2002, 232). In the year 2000, Malaysia had a GNP per capita of $3,884, about 13 times that of Ghana's GNP per capita of $285.Ghana had an infant mortality rate 65 per 1,000 live births, while Malaysia's rate was 8 per 1,000 live births. Ghana has remained largely an agricultural country, with contributions of about 36 percent to its gross domestic output. Malaysia has become highly industrialized, with the agricultural sector contributing only 14 percent to its gross domestic output.

TABLE 1: Comparison Statistics

Sources: World Bank, World Development Report 2000/2001 & 2002 issues; Statistics Dept., Malaysia.

Ever since 1983, Ghana adopted an economic reform program and consistently followed an orthodox set of development policies under the assistance of the International Monetary Fund and the World Bank. However, it is rather confusing as to why economic progression and development has been quite slow in Ghana? Therefore it is through a comparative analysis, as mentioned before one may understand why a divergence exists. One of the key factors contributing to the development difference is political stability. Both countries inherited British political institutions, since they were former British colonies, but this differed greatly after independence was gained. Ghana has been plagued by coups since its independence while Malaysia established a sound framework of laws that allowed entrepreneurs to boom. One can definitely argue the fact that it is because of the privatization policy, which began in 1983 that Malaysia entailed a higher level of economic success. “With regard to the National Development Policy Target’s of Malaysia, the privatization programme has helped increase the indigenous community’s participation in the corporate sector”. It has allowed for increased savings and investment within the country rather than profits being leaked out. It is no secret that Malaysia is emerging as an economic giant not only in Asia but the world at large. Having a    monarchy, with a King being the Head of State has definitely been one of the contributing factors which ensures that national stability is not compromised whenever the state government faces a treat of any sort. The country stands by a parliamentary democracy with a constitutional monarchy where the King is the highest ruler and a Prime Minister as the head of government. Therefore it is every five years that the public elects the members of parliament and the party with the highest number selects a Prime Minister who forms the government of the nation. Over the past 25 years or so the current government has managed to stay in power by forming complex alliances with opposition parties. 

Ghana on the other hand has made countless efforts over the past thirteen years to apply democracy to its nation. Constitutions are being put in place for democracy to flourish which is therefore a step in the right direction. There is a parliament and a president, which are both elected by the people every four years, with the President choosing a cabinet and a counsel of state, which are all approved by parliament; a system that is very similar to the American system. So we can argue; is this system the best for a country that is aspiring to be a middle-income nation? Such an accomplishment means that within the next four years, there must be an obvious indicator that poverty is eradicating, signs of increased private sector development should be highly visible and the construction of social and government institutions should be present to administer over the economy and assist in the human development of the nation. Can such an achievement be gained, some say it may take quite a generation to achieve but only time will tell.

If one compares, Ghana is about one three-tenths (1.3 times) that of Malaysia and the population of Malaysia is about 3.5 million people more than that of Ghana, which means that in effect Ghana and Malaysia have nearly the same number of people per square kilometers. Therefore the structures and principles applied in Malaysia that allows for solidarity and stability should most definitely be looked at in Ghana, where the people elect the parliament; and the majority party selects a government with a Prime Minister. It has proven to be a success in Malaysia, so adoption of this method may also result in stability and victory in Ghana, which has faced continuous constraints of corruption and economic mismanagement [IMF, International Financial Statistics, 1969, 138]. Although there were signs of advancement and improvements made by the Rawlings government in 1983, with the initiation of the Economic Recovery Program (ERP), Ghana was still seen as a country that was wounded by political instability, due to the image projected by the many coup attempts. Ghana’s politics did not create an atmosphere of certainty and policy continuity that was needed to draw and retain private investment and skills. What‘s needed by this economy is major private foreign investments to assist in sustaining the growth of its market, but a trail of instability has not helped in this type of investment. Nonetheless, there is rising confidence with respect to political stability in Ghana, especially with the election of John A. Kufuor, an opposition leader, to the presidency in 2000. There is also hope that the current leadership of the Ghanaian military is more tolerant.

“The term human capital is recognition that people in organizations and businesses are important and essential assets who contribute to development and growth, in a similar way as physical assets such as machines and money. The collective attitudes, skills and abilities of people contribute to organizational performance and productivity. Any expenditure in training, development, health and support is an investment, not just an expense.”(Derek Stockley, 1996-2007). Human development takes into account the literacy level of the people and provision of educational systems as well as good health services. Human capital is one of the most important assets to an economy. For that reason education and health are vital in human development. Education in any developing nation is compulsory for growth to take place, for it is through education that skilled labor is provided, and increased productivity is achieved. Education is seen as the only tool that enables the poor to have a share of the wealth distribution. Education also leads to a range of indirect benefits, such as greater ability to learn new skills, and fertility reduction. Immediately after its independence, Malaysia made a strenuous effort to provide primary education to as many children as possible, therefore another indicator of the differences in the development of Ghana and Malaysia is visible through the literacy rates of its people. Table 2 below shows the comparisons of the estimated percentage of people that are enrolled in schools in both countries.

TABLE 2: Percentage of Primary School Age Group Enrolled

Source: World Bank, WDR, various issues.

Ghana saw prolonged economic decline from 1960 to the late 1980s, when recovery began. It was difficult for the Ghanaian government to maintain spending on education during its time of economic stagnation. The percentage of GDP allocated to education had dropped from 6.4 percent in 1976 to 1.0 percent in 1983 (Avotri, Owusu-Darko, Eghan, & Ocansey, 1999, 10).Overall GNP per capita fell by 1.5 percent per year, while the working population had doubled. As a result the share of labor force receiving wages hardly changed. Meanwhile Malaysia’s economy took off, with a 4 percent growth in there GNP, this therefore led to increased employment, increases in wages, and a dramatic increases in industry and services, while self employment declined. The other aspect of human capital that helps to sustain the economic development of a country is the health of both its workforce and general population.

A direct benefit of a healthy workforce is that a good labor supply is present, one that is more productive and can also contribute for a longer period to there country’s economic development. Both countries have shown signs that significant progress was made in the public health sector since their independence. In 1960, the infant mortality rate in Ghana was 143 per 1,000 infants and the Malaysian rate was about half of that in Ghana. By 1998, Ghana was able to cut the infant mortality rate significantly to 65 deaths and Malaysia managed to reduce it to 8 deaths per 1,000 infants. Though progress was made by Ghana in the health area, much work is still needed in terms of improving the health of its overall population. In 1996; only about 42 percent of its population had access to sanitation whereas Malaysia’s percentage was 94 percent (World Bank, WDR, 2000/2001, 286). Another major difference that existed between both countries was that in the 1990s the total expenditure, yearly on health by both countries was almost equivalent, yet the rewards were quite unlike.

It is without argument a strong human capital attracts and encourages growth, and an educated population generates an enduring effect economically with a larger tax base and socially through increased political involvement. Therefore investment in human development and the human capital of any country should be included in any economic development policy. The prevalence of a countries human capital will ultimately determine the rate of growth of its economy and integration into the world markets. So in conclusion, the status of development of both Ghana and Malaysia is certainly not alike at present, for Malaysia had definitely defeated Ghana is achieving developmental status or trying to do so. Though all of the factors which may have lead to this divergence were not discussed, with the comparison of the economic development, political stability and human development for both countries, Malaysia has definitely discovered the key to their continued success and movement towards developing country status.

Bibliography

• Malaysia Country Brief, World Bank;
• Malaysia Data and Statistics; CIA World Fact Book;
• Ghana Data and Statistics; CIA World Fact Book;
• : Issue 5, 2004
• Acheampong, Osman; Ghana’s Democracy in Danger (2005-04-14)
• Banco Mundial; Jobs, Poverty and Working Conditions In South Africa (1995)
• Des Gasper; The Ethics of Development, from Economism to Human Development
• John Deutsch Institute: Malaysis’s Public Sector in the Twentieth Century: Planning for 2020 and Beyond.