Modeling policy coherence for development

 

The Policy and Operations Evaluation Department (IOB) of the Netherlands Ministry of Foreign Affairs has asked SOW-VU to analyze the extent to which different Dutch and EU policies have affected Ghana. The study focuses on the combined effects of aid and non-aid policies, driven by the concern that incoherence, for instance between trade and development policies, may reduce the effectiveness of development-oriented interventions. Parallel to this study of SOW-VU, a team of Ghanaian experts of the University of Ghana, Legon, has started a qualitative analysis of the influence of donor countries on the Ghanaian policy and development agenda. A mid-term meeting of the two teams and IOB was held at the Royal Netherlands Embassy in Accra, Ghana, on 8 and 9 July, 2013. On behalf of SOW-VU, Lia van Wesenbeeck, Bart van den Boom and Wim van Veen participated in this meeting.


For the quantitative analysis, an Applied General Equilibrium model for Ghana, developed at SOW-VU and calibrated for the period under study (2006-2011) is used while information from the spatially explicit database “Africa in Maps” is updated and extended to provide a comprehensive view on the Ghanaian economy in this period. The basic methodology applied in the project is counterfactual analysis, i.e. gaining insights in the likely effects of policy packages by considering counterfactual history – what if donor policies would have been different?

 

At the mid-term meeting, indicators of the factual development of the socio-economic situation in Ghana since 2006 were reviewed, knowledge gaps were identified and the elements of the counterfactual scenarios were discussed. In addition to aid policies, specific attention will be paid to the EU-Ghana Economic Partnership Agreement, the impact of the Common Agricultural Policy, the Dutch-Ghanaian bilateral tax treaty, the Dutch policy towards immigrants from Ghana and the Voluntary Partnership Agreement between EU and Ghana on trade in certified wood. In the design of the counterfactual scenarios, a crucial role is attributed to the possibilities for Ghanaian policy makers to react to changes in Dutch/EU policies by turning to other donors, attracting funds from upcoming economies or raising the country’s own resources, in particular profit taxes.

 

In the coming months, the counterfactual scenarios will be conducted. The final seminar with the presentation of findings of the project is scheduled later this year.