PRIVATE INVESTMENT UNDER UNCERTAINTY IN GHANA

Ghana's Economic Recovery Program saw considerable growth of the economy during 1985-91. This commendable performance slackened after 1992, a fact which is attributable to poor private investment response following reform. This article shows that the poor growth in private investment may be attributed to the perception of uncertainty in the political and economic environment since 1982. The uncertainty is derived from the low credibility of government as it has been unable to assure investors that earlier decisions that showed a bias against private wealth will not be repeated. Economic incentives arising from reforms do not provide guarantees against poor credibility.