AGRICULTURAL TRANSFORMATION, SERVICES AND INDUSTRIALISATION: THE ROLE OF TECHNICAL AND VOCATIONAL EDUCATION AND TRAINING IN GHANA

Abstract

Since the globalisation phenomenon, there has been renewed interest in examining the impact of Foreign Direct Investment (FDI) on the economic transformation of host economies because these changes have created new demand for a creative labour force. In this paper, I examine the role of education and training, focusing on Technical and Vocational Education and Training (TVET) as a tool for enhancing the productivity of the labour force for achieving sector growth in the agriculture, services and industry sectors in Ghana. I specify a sector growth model and estimate the model using Two-Stage Instrumental Variable Generalised Methods of Moments (2SIV-GMM) estimator. I employ a comprehensive panel dataset of 43 countries in Sub-Saharan Africa (SSA) and spanning the period 1980-2015. Empirical results of the predictive estimates for Ghana reveal four main findings. First, an increase in income is growth-impeding in the agriculture and industry sectors, but growth-enhancing in the services sector. Second, FDI is growth-impeding in the agriculture and services sector, but growth-enhancing in the industry sector. Third, the substitution phenomenon characterises the linkage between agriculture-industry and agriculture-services sectors of the economy. Fourth, TVET is growth-enhancing in the agricultural and industrial sectors, but growth-impeding in the services sector. There is a mismatch between industry employment and growth in the industry sector. From a policy perspective, the findings highlight the need to strengthen the cooperation between the TVET institutions, policymakers and industry in the development and implementation of the competency-based curriculum. The provision of adequate national financing of TVET initiatives is critical to building a well-diversified educational system that meets the demand for a more adaptable and multi-skilled labour force for achieving sustainable development in Ghana