Placing too much emphasis on macro-economic models and econometrics in solving our socioeconomic problems over the years have not been helpful. They have not been helpful because they can only analyze the outcomes of our economic decisions without telling us the root causes of our economic malaise.

Mathematical models are used in economics to describe the past and the present policy decisions and help us predict the future behaviors and outcomes if all things remain unchanged. By themselves, mathematical models cannot help us change economic outcomes because they cannot change human behaviors.

Development does not only involve quantitative growth but also a qualitative change in human behavior. Nothing will change economically until we change the human behaviors that produced the undesired or desired outcomes. The only way to change the socioeconomic conditions prevailing in Africa or Ghana is to change people's Mindset.

The welfare mentality that is prevalent in sub-Saharan African countries, including Ghana that seeks solutions to our economic problems from outside, needs to change. It is not only the "welfare mentality" that needs to change, but all other cultural Mindsets that inhibit innovation and growth have to give way to a growth mindset.

In part 2 of the series, I argue that the critical factors influencing our economic development are cultural and social mindsets. There is a need for real ontological change in our mindsets when we humbly and honestly admit our limitations, while recognizing the great potentials we possess to bring about immense development in our country. The great philosopher Aristotle said, "A nation is not built by mountains and trees, notwithstanding it is built by its citizens' character." In other words, natural resources: Gold, bauxite, oil, manganese, rivers, and fertile soils do not build a nation, but the mindsets of its citizens. The mindset factors influence employees' productivity, citizens' work habits, use of technology, market habits, public stewardship, entitlement, employee engagement, work performance, and national character. The psychological, social, and cultural influences on decision-making significantly impact development outcomes but have been ignored in economic analyses.

We need to investigate what cultural mindsets influence household saving, and firms to invest and increase productivity, communities to reduce incidences of diseases, parents to improve children's cognitive development, and consumers to make wise choices in their expenditure patterns. Furthermore, Christians need to understand that the Holy book commands them to work six days a week. It is high time we realize that our economic problems do not stem from lack of natural resources, but instead from a lack of growth mindset.

We cannot deal with our socioeconomic problems without analyzing the mindsets that create the problems. As Albert Einstein once said, "Problems cannot be solved with the same mindset that created them." Individuals' perceptions, attitudes, and behaviors related to how they view situations are paramount in solving any problem. We need to examine our attitudes and mindsets about development. What are our thoughts about ideas as catalysts for development and growth?

Do we, as individual Ghanaian society members, believe that we can develop by harnessing our existing natural and human resources judicially or borrowing from outside? What are our leaders' mindsets about legacy as compared to acquiring wealth? Do they believe that we have enough talents both at home and abroad to solve our problems? How do we perceive challenges and obstacles in the course of our ordinary daily pursuits? Do we, as a nation, believe that tenacious efforts are critical to economic growth and development?

Carol Dweck, a psychologist at Stanford University, has studied the consequences of what people believe about their capabilities' mutability. In other words, are our capabilities to solve problems based on our innate talents, intelligence, smartness, or the amount of effort we put in a task? Her studies have revealed two distinct types of beliefs about human capabilities. The first is what she terms a fixed mindset. People with a fixed mindset see their capabilities, such as their collective efficacy in dealing with problems, as unchangeable.

The other type of belief is what she calls a growth mindset. People with a growth mindset view their capabilities as a potential that can be developed or harnessed: they believe that intelligence is plastic and that one can develop it through tenacious efforts. Do we as people throw our hands in the air when we face difficult challenges and say, "this cannot be done," instead of saying, "though we cannot do it today, given time, we will be able to do it?"

People with a fixed Mindset see their capabilities as primarily inborn, which are hardly changeable. They avoid challenges and respond to adversity as an indication of a lack of talent, often giving up early. They often respond to criticisms defensively and fail to own, recognize, and admit mistakes. People with fixed Mindset impede cooperation, feedback, and growth.

Contrarily, people with a growth mindset believe that capabilities are mutable by effort and effective learning strategies. These people try to learn and improve as much as possible and embrace challenges as opportunities where they can learn and grow. They interpret failure or adversity to indicate that more effort needs to be exerted, and better strategies need to be devised.

They consider criticism as productive feedback instead of letting it affect them negatively. What kind of Mindset do we have, a fixed one or a growth one? The idea of a growth mindset is now being applied in education, sports, and workplaces. It is used in organizational change models and as development tools in other developing countries.

In education, studies have shown that a growth mindset-the belief that intelligence is not fixed and can be developed reliably predicts achievement across a national sample of students, including almost all schools and socioeconomic strata. A recent study in Chile explored the relationship between income and Mindset and found that students from lower-income families were less likely to hold a growth mindset than their wealthier peers. However, students from low-income backgrounds who hold a growth mindset were appreciably buffered against poverty's deleterious achievement effects.

These results suggest that Mindset may be one mechanism through which economic disadvantage can affect achievement. We can teach a growth mindset to students, employees, organizational leaders, and political leaders through carefully designed workshops. While many African countries have not paid attention to the psychological basis of individuals' economic behaviors and the impacts of economic processes on individuals' psychology, the western countries have focused their attention in applying behavioral insights to its policy-making over the past decade.

As a nation, we need to begin exploring the critical factors that undermine our economic development instead of seeking help from outside and depending on economic models that were developed to deal with circumstances that might not apply to ours.

Read the rest here:
The Role Of Mindset In Economic Development: Fixed And Growth Mindset: Part 2 - Modern Ghana