the Lomé Convention affected only incentive structure, without directly influencing the economic system, its role in specialisation has rarely been specifically analysed. The sugar case study shows that the interaction between the Lomé Convention and ruling elites’ pursuit of political survival created a misallocation of production resources and eventually a financial crisis. As stated in the introduction, this chapter focuses on the problematic nature of the sectors produced or preserved by this interaction. A detailed case study of cocoa cultivation in Ghana and Côte d’Ivoire is presented in the next sub-section. Although the Lomé Convention and the cocoa sector were not directly connected, the link between the trade system and political elites’ incentive structure affected West African cocoa production because the sector is centralised and thus controlled by political elites. Therefore, the trade system indirectly affected the government’s policy on cocoa cultivation. Case Study of Diminishing Returns in Cocoa This case study illustrates the risk of intensive production (and increase in poverty among cocoa planters) in Ghana and Côte d’Ivoire following the exhaustion of the production factor of forestland Cocoa beans are the main export product of Ghana and Côte d’Ivoire, and the product most vigorously promoted in the Lomé trade experiment (Hewitt, 1983; Aiello, 2002; Martin, 2002: 26). In addition to the market advantages offered to ACP cocoa producers in the EC market (e.g., 6.1 percent protection for cocoa paste, 4.2 percent for cocoa butter fat and oil, and 2.8 percent for cocoa powder), cocoa and coffee accounted for the greatest part of the scheme (EEC 1984; European Commission, 1997: 8). This is according to the negotiations of ruling elites with the EC. Côte d’Ivoire and Ghana are the two main global producers/exporters of cocoa. Between 1975 and 1989 (Lomé I to III), 51 percent of STABEX funding (the price stabilisation scheme of Lomé convention) was allocated to cocoa and coffee, and Côte d’Ivoire alone received more than 20 percent of the entire STABEX from 1975 to 2000 (among 71 ACP countries) due to the country’s concentration in cocoa (Martin, 2002: 26). The EC also financed cocoa-development projects in Côte d’Ivoire and Ghana through its European Development Fund (EDF) series of National Indicative Programs/Country Strategy Papers (NIPs/CSPs).
the Lomé Convention affected only incentive structure, without directly influencing the economic system, its role in specialisation has rarely been specifically analysed. The sugar case study shows that the interaction between the Lomé Convention and ruling elites’ pursuit of political survival created a misallocation of production resources and eventually a financial crisis. As stated in the introduction, this chapter focuses on the problematic nature of the sectors produced or preserved by this interaction. A detailed case study of cocoa cultivation in Ghana and Côte d’Ivoire is presented in the next sub-section. Although the Lomé Convention and the cocoa sector were not directly connected, the link between the trade system and political elites’ incentive structure affected West African cocoa production because the sector is centralised and thus controlled by political elites. Therefore, the trade system indirectly affected the government’s policy on cocoa cultivation. Case Study of Diminishing Returns in Cocoa This case study illustrates the risk of intensive production (and increase in poverty among cocoa planters) in Ghana and Côte d’Ivoire following the exhaustion of the production factor of forestland Cocoa beans are the main export product of Ghana and Côte d’Ivoire, and the product most vigorously promoted in the Lomé trade experiment (Hewitt, 1983; Aiello, 2002; Martin, 2002: 26). In addition to the market advantages offered to ACP cocoa producers in the EC market (e.g., 6.1 percent protection for cocoa paste, 4.2 percent for cocoa butter fat and oil, and 2.8 percent for cocoa powder), cocoa and coffee accounted for the greatest part of the scheme (EEC 1984; European Commission, 1997: 8). This is according to the negotiations of ruling elites with the EC. Côte d’Ivoire and Ghana are the two main global producers/exporters of cocoa. Between 1975 and 1989 (Lomé I to III), 51 percent of STABEX funding (the price stabilisation scheme of Lomé convention) was allocated to cocoa and coffee, and Côte d’Ivoire alone received more than 20 percent of the entire STABEX from 1975 to 2000 (among 71 ACP countries) due to the country’s concentration in cocoa (Martin, 2002: 26). The EC also financed cocoa-development projects in Côte d’Ivoire and Ghana through its European Development Fund (EDF) series of National Indicative Programs/Country Strategy Papers (NIPs/CSPs).
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