In November 2010, the government of Ghana made a number of changes to the way it calculated GDP, resulting in a 60% upward change in its estimate. The change led to discussion of the accuracy of GDP estimates, particularly in the context of Africa. It was also the first of many rebasings undertaken by African economies, most of which led to significant upward revisions in their estimates of GDP.
Changes made
Change of base year
The base year for calculations was changed from 1993 to 2006. In a paper discussing the change, development economists Morten Jerven and Magnus Ebo Duncan noted: "Upward revisions stemming from changes in outdated base years are common in developed countries such as the United States (Runkle 1998)" and also said that one contributor to the high magnitude of the upward revision was the huge increment in base year (by 13 years) as opposed to more regular updates done in countries such as the United States.
Change in compilation methodology
The compilation methodology was changed from one based on the 1968 System of National Accounts (SNA) to the 1993 SNA. In a speech at the IARIW-SSA conference, World Bank economist Shanta Devarajan identified this as the main cause for the huge upward bump in GDP.
Improvement and revision of data sources
New and better data sources were used for the new GDP series.
Change in industry classification
The new GDP series used the International Standard Industrial Classification (ISIC) version 4.
Effect on data series
Total GDP estimate went up by 60%
The news brief from the Ghana Statistical Service announcing the change noted that the new GDP series estimated a 60.3% larger GDP in the base year 2006 than the old GDP series. This number of 60% would be echoed by other sources discussing the matter. This would contrast with the 2015 India GDP rebasing, which would result in a slight downward revision of India's total GDP estimate.
Sectoral distribution of GDP changed but trends remained similar
The new method showed lower shares in GDP of agriculture (dropped by about 8 percentage points) and industry (dropped by about 8 percentage points) and a compensatory higher share in GDP of services (increased by about 16 percentage points). Trend lines for all three sectors were fairly similar between the new and old series. This would contrast with the 2015 India GDP rebasing, where the share of services in GDP would be revised downward and the share of industry would be revised upward.
Reception by development economists
Immediately after the announcement, Todd Moss wrote in the Center for Global Development blog: "Boy, we really don’t know anything." Moss noted that Ghana had been one of the more heavily scrutinized economies of Africa, and that Moss had himself done a Ph.D. on Ghana, yet the numbers were so off. This made him pessimistic about the quality of statistics for other countries.
On October 6, 2011, Shanta Devarajan, World Bank economist, penned a blog post titled Africa's statistical tragedy, a wordplay on Easterly and Levine's classic Africa's Growth Tragedy. In the post, Devarajan noted that the absence of high-quality statistical data hampered Africa, development economists and international institutions, and donors, but that the problem could be rectified.
In August 2012, Revising GDP estimates in Sub-Saharan Africa: Lessons from Ghana by Morten Jerven and Magnus Ebo Ducan was published in The African Statistical Journal. Jerven also wrote about the issue in The Guardian in November 2012, leading to additional commentary from The Washington Post.
See also
References
- "Ghana's GDP goes up by 60%". GhanaWeb. November 5, 2010. Retrieved November 18, 2017.
- ^ "News Brief: New Series of the Gross Domestic Product (GDP) Estimates" (PDF). Ghana Statistical Service. November 3, 2010. Archived from the original (PDF) on January 7, 2018. Retrieved November 18, 2017.
- ^ Moss, Todd (November 5, 2010). "Ghana Says, Hey, Guess What? We're Not Poor Anymore!". Center for Global Development. Retrieved November 18, 2017.
- ^ Devarajan, Shanta (October 6, 2011). "Africa's statistical tragedy". World Bank. Retrieved November 18, 2017.
- ^ Plumer, Brad (November 24, 2012). "Think U.S. GDP numbers are unreliable? Check out Ghana". Washington Post. Retrieved October 16, 2017.
- ^ Jerven, Morten; Duncan, Magnus Ebo (August 1, 2012). "Revising GDP estimates in Sub-Saharan Africa: Lessons from Ghana" (PDF). The African Statistical Journal. 15. Retrieved October 16, 2017.
- ^ Jerven, Morten (November 20, 2012). "Lies, damn lies and GDP. Or, how Ghana went from being one of the poorest countries in the world one day to an aspiring middle-income one the next". TheGuardian.com. Retrieved October 16, 2017.
- ^ David Keohane (February 3, 2015). "India: GDP growth rate up, confidence in statistics down?". Financial Times. Retrieved October 21, 2017.
- "Africa's Growth Tragedy: Policies and Ethnic Divisions" (PDF). April 1, 1997. Retrieved November 18, 2017.