Separation of Powers and Economic Development in Ghana: A Bayesian State Space SEM-Based Path Analysis

Ghana has sustained constitutional democratic governance since 1992; however, concerns persist regarding executive dominance, weak institutional independence, and uneven economic performance. Drawing on institutional theory, this study examines whether constitutional separation of powers influences economic development beyond conventional macroeconomic factors. Using annual data from 1996 to 2023, the analysis employs a Bayesian State Space Structural Equation Modeling (BSS-SEM) framework to capture the dynamic and latent nature of institutional quality and development outcomes under limited sample size and missing data. Separation of powers is modeled as a latent construct and measured by the Rule of Law, Regulatory Quality, and Voice of Accountability, while economic development is modeled as a latent construct using the Human Development Index, Gross Domestic Product, and Foreign Direct Investment. The results reveal a positive, persistent effect of separation of powers on economic development, strengthening over time and underscoring the role of constitutional design in sustaining economic performance.