On the Road to Economic Prosperity: The Role of Infrastructure in Ghana (Elements in the Economics of Emerging Markets)

By: Tuan Anh Luong and Zenas Azuma

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Synopsis: This Element investigates how the Ghanaian household wealth index is impacted by travel time reduction, which is a direct effect of infrastructural investments from 2000 to 2016. The wealth index is constructed based on the possession of selected assets and reﬂects the well-being of residents in Ghana. The Element employs two datasets, the Demographic and Health Survey (DHS) and the DHS Covariates. The two-stage least square estimation is implemented to establish the causal relationship. The Element ﬁnds that a ten percent reduction in travel time from 2000 to 2015 would result in a 1.2 percent increase in the wealth index from 2003 to 2016. This ﬁnding is robust to various settings, including the addition of more control variables, the use of different instrumental variables, and the study of both short-term and long-term effects. The analysis lends support to the Ghanaian government's current economic and infrastructure development plans.