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Financialisation and Poverty Alleviation in Ghana
Myths and Realities
Series: - Studies in Critical Social Sciences, Volume: 209/14
- New Scholarship in Political Economy, Volume: 209/14
Author:
The neoliberal policy response to the crisis in Ghana did not succeed in reversing the economic decline in both the medium and long term. In fact, quite the opposite, rather than undoing the economic decline, Frimpong argues that the policy prescriptions further weakened the country’s ability to develop. This is because the policies intentionally and unintentionally encouraged factors that destabilised the possibility of the real productive assets to earn commensurate returns to facilitate the flow of capital to the real sectors to ensure the survival of industrial enterprises. Rising profit in the financial sector incentivised financial capitalist to divert capital into financial assets at the expense of productive investment, further decelerating the pace of real capital accumulation in the country.
Francis B. Frimpong, Ph.D. (2020) from the University of East London, is a Lecturer of Economics and Strategic Business Analytics at the University of East London (UEL). He is also Assistant to the Directors of the Centre for the Study of States, Markets and People (STAMP) at UEL. A recent (co-authored) publication is The Pandemic and the Economy of Africa: Conflicting Strategies between Tanzania and Ghana (2020).
"Financial inclusion policy as a way of empowering the poor makes poverty a financial problem in Ghana – the financialisation of poverty. Francis Boateng Frimpong tackles this question with theoretical sophistication and vivid empirical detail. This is an original addition to our understanding of how-and-why neoliberal restructuring and its financialisation dimension work in a low middle-income country, the first country in Sub-Saharan Africa to achieve the Millennium Development Goal 1, which is the target of halving extreme poverty. Frimpong has authoritatively produced this important political economy contribution about the impact of the exponential growth of finance on poverty alleviation in Ghana. Highly recommended." - Bülent Gökay, Professor of International Relations, Keele University
"This book provides original theoretically sophisticated, historically sensitive and empirically grounded analysis. The political economy history of Ghana is narrated in a way that makes the reader understand what the country went through, and where it is headed. The author has done justice in his narration." - Abraham Adu, University of Aberdeen
"The book offers a comprehensive assessment of the nature and distinctive features of financialisation in the periphery, with a focus on Ghana. This book provides academics, professionals and policy makers with the understanding of policy response towards the alleviation of the overarching poverty in Ghana. Crucially, espousing an indispensable hypothetical approach to financialisation, the uniqueness of Ghana and its common features with the core. It is a must-read for supporters of both Keynesian and Marxism." - Emmanuel Affum-Osei, Kwame Nkrumah University of Science and Technology
"All aspects of this book are fascinating to read. However, the one that fascinated me the most was the in-depth analysis on baking the unbanked, specifically the use of mobile money and how it still benefits the capitalists despite promises of relieving the poor. Frimpong’s analyses throughout are a very interesting read for researchers, students, and even Marx and Keynes enthusiasts. It is a must read." - Leah Mwainyekule, University of Hull
"A book on this historically specific geographical setting contributes theoretically to studies on financialisation in general, helping to determine its prominent features better. It is a good source of information for researchers who want to explore the history of the political economy of Sub-Saharan Africa, and in particular, Ghana." - Mato Magobe, The Open University of Tanzania
"This book provides original theoretically sophisticated, historically sensitive and empirically grounded analysis. The political economy history of Ghana is narrated in a way that makes the reader understand what the country went through, and where it is headed. The author has done justice in his narration." - Abraham Adu, University of Aberdeen
"The book offers a comprehensive assessment of the nature and distinctive features of financialisation in the periphery, with a focus on Ghana. This book provides academics, professionals and policy makers with the understanding of policy response towards the alleviation of the overarching poverty in Ghana. Crucially, espousing an indispensable hypothetical approach to financialisation, the uniqueness of Ghana and its common features with the core. It is a must-read for supporters of both Keynesian and Marxism." - Emmanuel Affum-Osei, Kwame Nkrumah University of Science and Technology
"All aspects of this book are fascinating to read. However, the one that fascinated me the most was the in-depth analysis on baking the unbanked, specifically the use of mobile money and how it still benefits the capitalists despite promises of relieving the poor. Frimpong’s analyses throughout are a very interesting read for researchers, students, and even Marx and Keynes enthusiasts. It is a must read." - Leah Mwainyekule, University of Hull
"A book on this historically specific geographical setting contributes theoretically to studies on financialisation in general, helping to determine its prominent features better. It is a good source of information for researchers who want to explore the history of the political economy of Sub-Saharan Africa, and in particular, Ghana." - Mato Magobe, The Open University of Tanzania
Foreword
Acknowledgements
List of Figures and Tables
Abbreviations
About Financialisation and Poverty Alleviation in Ghana
1 Introduction
1 The Historical Background of Finance and Growth
2 Scope and Limitations of the Book
3 Structure of the Book
2 Neoliberalisation and Financialisation The Debate
1 Introduction
2 The Rise of Neoliberal Capitalism
3 Theoretical Debates and Historical Precedents of Financialisation
4 From Stagnation to Financialisation
5 French Regulation School Theory of Financialisation
6 Post-Keynesianism and Financialisation
7 Trans-nationalisation and Liberalisation of Finance
8 Financialisation and Poverty Alleviation: Banking the Unbanked
9 Conclusion
3 Finance-Growth-Nexus Theoretical and Empirical Literature
1 Introduction
2 The Rise of Finance and the Financialisation of Everything
3 The Financial Profit Conundrum – Profit in Marxist Economics
4 Real Commodity Accumulation and Fictitious Accumulation
5 Contemporary Heterodox Perspectives on Finance-led Growth Debate
5.1 Banks, Financial Markets and Economic Growth: The Dilemma
6 Economic Functions of Financial Intermediaries
6.1 Empirical Evidence on Finance and Growth
6.2 Cross-country Studies of the Finance-Growth Nexus
6.3 Contemporary Literature on Econometric Models for Ghana
7 Dynamics of Financial Development, Income Distribution, Economic Growth and Poverty Reduction in Ghana
8 Poverty and the Pandemic: The Case of Ghana
8.1 The Economics of It All
9 Conclusion
4 The Case of Ghana
1 Introduction
2 Country Profile and Overview of Recent Economic Performance
3 The Political Economy of Ghana: From State-led Accumulation to Neoliberalism
3.1 Political and Economic Developments from Independence (1957) to 1982
3.2 Political and Economic Developments 1983–2019
4 Neoliberalism in Ghana
4.1 Neoliberalism and Housing Provision in Ghana
5 Financial Sector Reforms in Ghana – A Historical Perspective
5.1 Pre-structural Adjustment Financial Reforms 1957–1982
5.2 Post-liberalised Reforms
5.3 Relaxation of Bank Entry Restrictions, and Abolishment of Secondary Reserve Requirements 2005–2006
5.4 Recapitalising Banks
6 Financialisation in Sub-Saharan Africa: Accounting for the Ghanaian Paradox
6.1 Under-financed
6.2 … Yet Financialising
6.3 Reverse of Net Capital Flows – A Subordinate/Inferior Financialisation
7 Conclusion
5 Dimensions of Capital Structure and Liquidity Management in Ghana
1 Introduction
2 Theories of Capital Structure
2.1 Capital Structure: Traditionalists’ View
2.2 Value-irrelevance Theory by Modigliani-Miller
2.3 Capital Structure: Trade-off Theory
2.4 Capital Structure: Pecking-order Theory
3 Financialisation and Capital Structure Accumulation in Ghana
4 Classification of Capital Accumulation Process in Ghana
5 Contradictions in Political-Economic Arrangements in Ghana
5.1 Financing Challenges
5.2 Government Policies
5.2.1 Corruption
5.2.2 State of Infrastructural Development
6 Conclusion
6 The Issue of Poverty
1 Introduction
2 Poverty Measurement Conundrum
3 Absolute Poverty
3.1 Poverty in Administrative Regions
4 Relative Poverty
4.1 Using Non-monetary Deprivation
5 The Paradox of Sub-Saharan Africa’s Middle Class
5.1 The Two Competing Narratives on Africa
6 Neoliberal Globalisation and Poverty
7 Conclusion
7 Financialisation and Households From Theory to the Context of Ghana
1 Introduction
2 Theory of Consumption Function: Household Debt and the Life Cycle and Permanent Income Hypotheses
3 The Political Economy of Household Finance
4 Payment Systems in Ghana: A Route towards Financialisation
4.1 Background-Mobile Money Services in Ghana
4.2 The Role of Mobile Money in Financial Inclusion in Ghana
5 Financialisation, Financial Inclusion and Mobile Money
6 Conclusion
8 Conclusion
1 Summing Up the Argument
2 The Content of Financialisation in Ghana
2.1 Banking Sector
2.2 Industrial Enterprises
2.3 Households
3 Policy Recommendations
References
Index
Acknowledgements
List of Figures and Tables
Abbreviations
About Financialisation and Poverty Alleviation in Ghana
1 Introduction
1 The Historical Background of Finance and Growth
2 Scope and Limitations of the Book
3 Structure of the Book
2 Neoliberalisation and Financialisation The Debate
1 Introduction
2 The Rise of Neoliberal Capitalism
3 Theoretical Debates and Historical Precedents of Financialisation
4 From Stagnation to Financialisation
5 French Regulation School Theory of Financialisation
6 Post-Keynesianism and Financialisation
7 Trans-nationalisation and Liberalisation of Finance
8 Financialisation and Poverty Alleviation: Banking the Unbanked
9 Conclusion
3 Finance-Growth-Nexus Theoretical and Empirical Literature
1 Introduction
2 The Rise of Finance and the Financialisation of Everything
3 The Financial Profit Conundrum – Profit in Marxist Economics
4 Real Commodity Accumulation and Fictitious Accumulation
5 Contemporary Heterodox Perspectives on Finance-led Growth Debate
5.1 Banks, Financial Markets and Economic Growth: The Dilemma
6 Economic Functions of Financial Intermediaries
6.1 Empirical Evidence on Finance and Growth
6.2 Cross-country Studies of the Finance-Growth Nexus
6.3 Contemporary Literature on Econometric Models for Ghana
7 Dynamics of Financial Development, Income Distribution, Economic Growth and Poverty Reduction in Ghana
8 Poverty and the Pandemic: The Case of Ghana
8.1 The Economics of It All
9 Conclusion
4 The Case of Ghana
1 Introduction
2 Country Profile and Overview of Recent Economic Performance
3 The Political Economy of Ghana: From State-led Accumulation to Neoliberalism
3.1 Political and Economic Developments from Independence (1957) to 1982
3.2 Political and Economic Developments 1983–2019
4 Neoliberalism in Ghana
4.1 Neoliberalism and Housing Provision in Ghana
5 Financial Sector Reforms in Ghana – A Historical Perspective
5.1 Pre-structural Adjustment Financial Reforms 1957–1982
5.2 Post-liberalised Reforms
5.3 Relaxation of Bank Entry Restrictions, and Abolishment of Secondary Reserve Requirements 2005–2006
5.4 Recapitalising Banks
6 Financialisation in Sub-Saharan Africa: Accounting for the Ghanaian Paradox
6.1 Under-financed
6.2 … Yet Financialising
6.3 Reverse of Net Capital Flows – A Subordinate/Inferior Financialisation
7 Conclusion
5 Dimensions of Capital Structure and Liquidity Management in Ghana
1 Introduction
2 Theories of Capital Structure
2.1 Capital Structure: Traditionalists’ View
2.2 Value-irrelevance Theory by Modigliani-Miller
2.3 Capital Structure: Trade-off Theory
2.4 Capital Structure: Pecking-order Theory
3 Financialisation and Capital Structure Accumulation in Ghana
4 Classification of Capital Accumulation Process in Ghana
5 Contradictions in Political-Economic Arrangements in Ghana
5.1 Financing Challenges
5.2 Government Policies
5.2.1 Corruption
5.2.2 State of Infrastructural Development
6 Conclusion
6 The Issue of Poverty
1 Introduction
2 Poverty Measurement Conundrum
3 Absolute Poverty
3.1 Poverty in Administrative Regions
4 Relative Poverty
4.1 Using Non-monetary Deprivation
5 The Paradox of Sub-Saharan Africa’s Middle Class
5.1 The Two Competing Narratives on Africa
6 Neoliberal Globalisation and Poverty
7 Conclusion
7 Financialisation and Households From Theory to the Context of Ghana
1 Introduction
2 Theory of Consumption Function: Household Debt and the Life Cycle and Permanent Income Hypotheses
3 The Political Economy of Household Finance
4 Payment Systems in Ghana: A Route towards Financialisation
4.1 Background-Mobile Money Services in Ghana
4.2 The Role of Mobile Money in Financial Inclusion in Ghana
5 Financialisation, Financial Inclusion and Mobile Money
6 Conclusion
8 Conclusion
1 Summing Up the Argument
2 The Content of Financialisation in Ghana
2.1 Banking Sector
2.2 Industrial Enterprises
2.3 Households
3 Policy Recommendations
References
Index
All interested in political economy, particularly African political economy, heterodox economics, Marxist economics as well as Keynesian economics. Also, anyone interested in how neoliberal capitalism works in Africa.