Implications of the Fertilizer-Subsidy Programme on Income Growth, Productivity, and Employment in Ghana

48 Pages Posted: 15 May 2020

See all articles by Abdul Malik Iddrisu

Abdul Malik Iddrisu

University of Ghana

Dede Gafa

affiliation not provided to SSRN

Christian Arnault Emini

University of Yaounde II

Olivier Beaumais

University of Angers - French National Center for Scientific Research (CNRS)

Date Written: May 14, 2020

Abstract

We examined the economy-wide impact of a fertilizer-subsidy programme in Ghana with a focus on agricultural-sector productivity, overall economic growth, employment, and welfare. We adopted a modified version of the standard PEP-1-t model. Our results suggest that the fertilizer-subsidy programme improved GDP growth and sector-based productivity—notably, in the main agricultural subsectors and the food industry. Specifically, compared to the business-as-usual scenario, the implementation of the fertilizer-subsidy programme in 2017 improved the productivity of the maize, sorghum, and rice subsectors by about 8.3%, 4.5%, and 3.8%, respectively. These effects were, however, about four-times, three-times, and six-times higher in 2020 than their 2017 levels, respectively. We also observed important positive effects on the value-added of the food industry, indicating the presence of a backward linkage with agriculture. The unemployment rate among skilled labour (except urban skilled labour in agricultural) fell under the programme, and the decline in unemployment was relatively more pronounced for rural skilled labour in non-agricultural activities. In addition, we found evidence of positive effects on household consumption and, subsequently, on welfare. Based on these findings, we recommend that the fertilizer-subsidy programme be implemented and, if possible, extended beyond its planned implementation period.

Keywords: Agricultural sector, Fertilizer subsidies, Productivity, Economic Growth, Employment, CGE modelling

JEL Classification: C68, D24, I32, Q18

Suggested Citation

Iddrisu, Abdul Malik and Gafa, Dede and Emini, Christian Arnault and Beaumais, Olivier, Implications of the Fertilizer-Subsidy Programme on Income Growth, Productivity, and Employment in Ghana (May 14, 2020). Partnership for Economic Policy Working Paper No. 2020-05, Available at SSRN: https://ssrn.com/abstract=3601004 or http://dx.doi.org/10.2139/ssrn.3601004

Abdul Malik Iddrisu (Contact Author)

University of Ghana ( email )

PO Box 25
Legon, Accra LG
Ghana

Dede Gafa

affiliation not provided to SSRN

Christian Arnault Emini

University of Yaounde II ( email )

Yaounde
Cameroon

Olivier Beaumais

University of Angers - French National Center for Scientific Research (CNRS) ( email )

3, rue Michel-Ange
Paris cedex 16, 75794
France

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