The second African star has fallen
On April 19, 2010, President Museveni launched a five-year development plan in Uganda with a focus, inter alia, on full employment and state intervention, reminiscent of Keynesian economic model which drove the post world war economic boom until the second half of the 1970s when a combination of stagnant economic growth, rising unemployment and inflation (stagflation) rendered the model irrelevant. It was replaced by the Washington Consensus or stabilization and structural adjustment programs (SAPs). Unlike the Keynesian model which focused on creating jobs and promoting state participation in the economy, the Washington Consensus focused, inter alia, on macroeconomic stability through inflation control and private sector participation in the economy as the engine of growth under the guidance of the invisible hand of the market forces and a trickle down mechanism.
In Africa Ghana was among the first countries to embrace the Washington Consensus. A combination of factors which included excess capacity, the return of Ghanaians from Nigeria that boosted the numbers of cheap labor, generous donations, good weather including adequate rainfall, favorable trade conditions, guidance from the IMF, the World Bank and prominent international development economists as well as a committed government under the leadership of Jerry Rawlings, Ghana registered rapid economic growth and per capita GDP. It became a “star performer and success story” to be emulated by other developing countries.