From the early 1960s to the early 1980s, the officially recorded production of cocoa in Ghana declined by 60 percent. During the 1983–95 Economic Recovery Program, however, cocoa production doubled. Although these developments have inspired much empirical research, most of the studies have been unable to explain the medium-term persistence of cocoa output to remain below its estimated capacity level. The paper argues that the price incentive to smuggle can explain as much as one-half of the observed decline in output and the subsequent recovery. A cointegration analysis and a dynamic error-correction model of cocoa supply support the analysis.

From the early 1960s to the early 1980s, the officially recorded production of cocoa in Ghana declined by 60 percent. During the 1983-95 Economic Recovery Program, however, cocoa production doubled. Although these developments have inspired much empirical research, most of the studies have been unable to explain the medium-term persistence of cocoa output to remain below its estimated capacity level. The paper argues that the price incentive to smuggle can explain as much as one-half of the observed decline in output and the subsequent recovery. A cointegration analysis and a dynamic error-correction model of cocoa supply support the analysis.

From the early 1960s to the early 1980s, the officially recorded production of cocoa in Ghana declined by 60 percent. During the 1983–95 Economic Recovery Program, however, cocoa production doubled. Although these developments have inspired much empirical research, most of the studies have been unable to explain the medium-term persistence of cocoa output to remain below its estimated capacity level. The paper argues that the price incentive to smuggle can explain as much as one-half of the observed decline in output and the subsequent recovery. A cointegration analysis and a dynamic error-correction model of cocoa supply support the analysis.

From the early 1960s to the early 1980s, the officially recorded production of cocoa in Ghana declined by 60 percent. During the 1983-95 Economic Recovery Program, however, cocoa production doubled. Although these developments have inspired much empirical research, most of the studies have been unable to explain the medium-term persistence of cocoa output to remain below its estimated capacity level. The paper argues that the price incentive to smuggle can explain as much as one-half of the observed decline in output and the subsequent recovery. A cointegration analysis and a dynamic error-correction model of cocoa supply support the analysis.

From the early 1960s to the early 1980s, the officially recorded output of cocoa in Ghana declined by 60 percent. During the 1983-95 Economic Recovery Program, however, cocoa official output doubled. Although these developments have inspired much empirical research, most of the studies have been unable to explain the medium-term persistence of cocoa output to remain below its estimated capacity level. The paper argues that the price incentive to smuggle can explain as much as one half of the observed decline in official output from its trend and the subsequent recovery. A cointegration analysis and a dynamic error correction model of cocoa supply support the analysis.

After almost 20 years of declining cocoa production, Ghana has been able in the last decade to increase the share of export prices going to producers and more than double production. Contrary to Washington Consensus prescriptions, these accomplishments were achieved through reforms that did not include market liberalization. In The Cocoa Coast: The Board-Managed Cocoa Sector in Ghana, the authors identify factors that have contributed to Ghana’s success in cocoa production. These include the accountability of the government for the sector’s performance (cocoa-sector performance being seen as a key dimension of economic management), its interest in maintaining the ability to raise funds globally as a reliable supplier of high-quality cocoa, and its policy of retaining a portion of producer revenues to promote the adoption of yield-enhancing measures. The authors also suggest how Ghana can improve the efficiency of the cocoa sector through measures such as increased transparency and curtailing services that would be better provided by the private sector. The Cocoa Coast will be a valuable resource for policy makers, development specialists, and others interested in different national development paths.