Meso-Institutions and Endogenous Development in Ghana: The Case of Ajumako-Enyan-Essiam District

This paper describes proactive local strategies adopted by Ajumako-Enyan-Essiam District, a less endowed locality focusing on institutions to transform the oil palm chain. The case typically demonstrates the potency of endogenous initiative of oil palm processing to turn around the fortunes of a district with low capabilities. The study confirms that the initiative has transformed the small and medium enterprises (SMEs) in the oil palm industry and injected dynamism into the district economy. The study demonstrates that the process has not only brought on target groups that were originally underserved with low capabilities but created gainful employment for members of those groups. The underserved SMEs have enhanced production, improved productivity and product quality for better market prices and high sales. However, the use of sector-based institutions such as business associations to reach the SMEs and develop the BDS market led to the exclusion of a greater number of SMEs. The study further reveals that meso-institutions such as sector-based and territorial ones were catalysts for the growth and development of SMEs. It confirms that improved business environment; access to credit, business support services and membership of business associations correlate with higher productivity and strong enterprise performance. Additionally, it reveals that micro-level enterprise strategies and meso-level interventions were not sufficient to transform SMEs. It stresses influences from the broader regulatory environment for the total transformation of SMEs and even proper functioning of mesoinstitutions. It has also been confirmed that the development of less endowed localities depends on their development potential and accessibility to markets. It further establishes that their sustainability, however, lies in the proper functioning of the drivers of local development: the organisation of the productive system, the diffusion of technology and the enabling space for adaptation of institutional arrangement. The study finds that these drivers govern the economic growth and development process, generate externalities and reduce transaction cost.