Embrace ‘tech-infusion’ growth strategy – World Bank urges
To escape the looming ‘middle-income trap’ – a phenomenon wherein countries experience stagnating growth and fail to transition into high-income status despite positive economic indicators – middle-income countries, including Ghana, are being urged to adopt new growth strategies…particularly tech-infusion.
This call, made by the World Bank in its World Development Report 2024, comes as the country is still reeling from high public debt and moderate growth rates which threaten its long-term economic aspirations.
The Bretton Woods institution believes the next few decades represent a critical juncture for middle-income countries like Ghana. Despite making strides in poverty reduction, these nations now face the daunting task of transitioning to high-income status. The proposed solution? A shift from traditional investment-focused approaches to a more innovative, technology-driven economic model.
At the heart of this strategy is ‘tech infusion’ – the integration of cutting-edge technologies such as artificial intelligence, automation and biotechnology across key sectors including manufacturing, agriculture and healthcare.
For Ghana, a country rich in natural resources but struggling with technological adoption, this approach could be the key to unlocking significant productivity gains and sustainable growth, the World Bank said.
“Ghana’s growth has been positive, but it needs to accelerate without resorting to excessive borrowing,” said Indermit Gill, Chief Economist of the World Bank, during the report’s launch.
Mr. Gill emphasised the need for countries like Ghana to move from focusing solely on investment to strategies that emphasise both technology infusion and innovation.
He added that Ghana must carefully manage its public debt relative to the Gross Domestic Product (debt-to-GDP) ratio while fostering an environment conducive to private investment – a delicate balance that has eluded many middle-income nations.
“Ghana’s growth rate has been positive, but it needs to increase significantly without excessive borrowing… It is Ghana’s private investors that will lead the country into high-income status. Government can provide a good environment but private investment is key,” he said.
The World Bank official noted that countries which have successfully transitioned to high-income status, such as South Korea, sustained rapid growth for several decades.
2i and 3i
The report identifies two crucial transitions for escaping the middle-income trap.
The first, known as the ‘2i’ strategy, calls for countries to combine investment with technology infusion; ensuring that foreign technologies brought in are effectively adapted and used domestically. This shift is seen as essential for middle-income countries, where technological diffusion could significantly boost productivity and growth.
The eventual goal is for these nations to move toward the ‘3i’ strategy, which integrates investment, infusion and innovation to achieve high-income status.
Ghana, which has been classified as a lower-middle-income country for over a decade, faces unique challenges. Its growth rate, though positive, has not been sufficient to match the trajectory of successful economies like South Korea or India.
Can’t repeat the same
Professor Peter Quartey, Director-Institute of Statistical, Social and Economic Research (ISSER), agreed – stressing that Ghana needs intentional policies to drive its economic transformation.
He highlighted the country’s reliance on raw material exports and insufficient investment in key sectors such as technology and agriculture.
“We need to be intentional about adding value to our exports and investing in areas that will enhance productivity, such as STEM education,” Prof.Quartey said.
He further emphasised the importance of a long-term development plan, noting that frequent changes in government policies have slowed the nation’s progress.