THE DIFFERENTIAL IMPACT OF ACCESS TO PUBLIC TRANSPORT, ELECTRICTY AND WATER ON HOUSEHOLD ECONOMIC WELL-BEING IN RURAL GHANA: A PSEUDO-PANEL

ANALYSIS EMMANUEL J. MENSAH

BSc. (Hons) Agricultural Economics; MPhil. Economics; &, International MSc. Rural Development ejmensah@gmail.com

BACKGROUND AND OBJECTIVE Access to public infrastructure services like transport, electricity and pipe-borne water is generally identified in the development literature as critical for economic transformation1. At the household level, infrastructure access is essential for improved socio-economic well-being2. However, empirical evidence on the extent to which access to different infrastructure services contribute to enhancing household economic welfare, especially in the developing world, remains limited. In a comprehensive review of the literature on this subject, Ayogu (2007) aptly surmise the problem as that overall the question is not about whether infrastructure matters but precisely how much it matters in different contexts? This study therefore responded to this important knowledge gap by providing some quantitative understanding of how much infrastructure matters to economic development and in the context of Ghanas development experience since the 1990s. This was achieved by investigating, empirically, the direction and size of the relationship between access to three different public infrastructure services (that is, public transport, water and electricity) and economic welfare of households in rural Ghana. ANALYTICAL FRAMEWORK In responding to the aforementioned objective, the study provided a new construction of the Sustainable Livelihood Framework. At the core of this new framework is the concept of relative cumulative effect of institutions in the determination of livelihood outcomes and the elaboration of livelihood assets, especially in terms of private and public assets3. This framework was then tested under the premise that infrastructure services are publicly provided. Access to these public resources is therefore exogenous to household decisions though they complement household capital endowments in ways that eventually influence welfare outcomes. Welfare could thus be modeled dynamically as a function of: 1) private capital endowment; 2) a vector of public assets that transpire through the manifestation of the

prevailing institutions; 3) household characteristics; and, 4) households livelihood vulnerabilities. METHODOLOGY AND RESULTS Using pseudo-panel modeling4 and three waves of nationwide livelihood surveys5, the empirical findings suggest that across Ghanas rural economy, private capital investments, in the absence of access to public infrastructure, yield negative effect on economic well-being. Further, access to public transport, electricity and water has important but differential impact on household welfare, ceteris paribus. Whereas the impact of access to water is conditional on a households endowment in private assets and the opportunity cost it faces, that of public transport and electricity is found to be significant and consistently positive across rural Ghana. Focusing only on agricultural households, access to public transport shows significant and positive impact on welfare, irrespective of asset endowment. The marginal effect of water and electricity is nonetheless negative though private capital has substantial positive impact on welfare. CONCLUSIONS AND POLICY RECOMMENDATION Toward the broader agenda of sustained poverty reduction and efficient targeting of development budgets, Ghanas rural development policy should prioritize public investment in rural transport systems. To maximize the economic impact of the provision of electricity and water, such investments must be targeted at communities with functional transport networks and private capital endowments. Among the rural agricultural households, policies aimed at sustaining households capacity in deepening private capital endowment and connectivity to functional public transport systems must be prioritized. As this study deployed real household consumption per capita as the measure of households welfare, other dimensions of welfare such as happiness, health and social security were generally overlooked. Future studies could investigate these dimensions in evaluating the nexus.
McKenzie, David J. 2004. Asymptotic Theory for Heterogeneous Dynamic Pseudo-Panels. Journal of Econometrics, Volume 120, p. 235 - 262. Royal Economic Society, USA. 5 GSS. 2008. Ghana Living Standard Survey: Report of the Fifth Round. Ghana Statistical Service, Accra
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1Stiglitz,

Joseph. 2011. Fair Trade for All: How Trade Can Promote Development. Carnegie Council for Ethics in International Affairs 2Commission for Africa. 2005. Our Common Interest. A report of the Commission for Africa. 3 See Mensah, EJ. 2012. The Sustainable Livelihood Framework: A Reconstruction. Unpublished

This brief is based on the findings of the thesis titled Infrastructure Access and Household Welfare in Rural Ghana: The Empirics of the Nexus and submitted for the award of the International MSc. in Rural Development (IMRD) by the Author. All rights reserved.