PRIVATE INVESTMENT UNDER UNCERTAINTY IN GHANA

Ghana's Economic Recovery Program saw considerable growth of the econo my during 1985-91. This commendable performance slackened after 1992, a fact which is attributable to poor private investment response follo wing reform. This article shows that the poor growth in private invest ment may be attributed to the perception of uncertainty in the politic al and economic environment since 1982. The uncertainty is derived fro m the low credibility of government as it has been unable to assure in vestors that earlier decisions that showed a bias against private weal th will not be repeated. Economic incentives arising from reforms do n ot provide guarantees against poor credibility.