The highly dollarized world’s economy, though it may be a good omen for the American economy, is creating serious structural economic problems for some countries.
Some countries are at the Mercy of the “Dollar God”. This is the insight of Fellow at CDD-Ghana and founder of NBOSI, Dr. Hene Aku Kwapong, in his thought-provoking article, “At the Mercy of Dollar God.”
Dr. Kwapong explains that in today’s global economy, the US dollar is more than just money. It is a judge, a referee, and sometimes a silent executioner. When it rises, countries far from Washington feel the pain. When it falls, there is brief relief. This is the uncomfortable reality for many economies.
He says the world almost runs on a dollar-centered system, and for countries like Ghana, this creates a deep structural problem that good intentions alone cannot fix.
The dollar does not only help countries trade with one another. It has become the global measuring stick. Economies are constantly compared against it. Currencies rise or fall depending on how they perform against the dollar, not necessarily on what is happening at home.
He says tools like the Dollar Index track this power, showing how strong the dollar is against other major currencies. When the dollar strengthens, many countries instantly look poorer, even if nothing has changed on their farms, factories, or offices.
To break it down for the layperson, you wake up one morning, and prices have jumped. Fuel costs more. Imported food is suddenly expensive. School fees and hospital bills creep up. Yet you are working just as hard as before. This is just because the dollar, miles away from Ghana, has strengthened.
In such a situation, a country’s currency is often shaped less by local effort and more by how advanced economies trade among themselves. Decisions made in the US, Europe, or China ripple outward, affecting exchange rates across Africa. When investors rush into the dollar because of global uncertainty, weaker currencies suffer.
When confidence shifts away, there is temporary relief. But relief does not last.
“This Dollar-centered system creates a structural problem. The dollar does not merely facilitate trade. It also acts as a global yardstick. Countries measure themselves against it using tools like the Dollar Index. When the dollar strengthens, much of the world feels poorer. When it weakens, there is relief, including for currencies like the Cedi,” he explained.
In such a situation, Dr. Kwapong explains that governments, in the short term, can manage currency pressure using reserves, loans, or policy tweaks. However, in the long term, there is no escape. A country must “show its work and its worth.”
This means producing more goods and services. It means growing the economy in real, tangible ways. This is GDP, the total value of what a country produces. It also means doing this work more efficiently, getting more output from the same effort. That is productivity.
If a country fails at these two things, its currency becomes hostage to global forces beyond its control. No amount of speeches, patriotism, or blame will save it.
This, Dr. Kwapong stresses, is not a moral judgment. It is not about laziness or virtue. It is about how money works. At its core, money is simply a claim on labor and output. Strong currencies represent economies that produce a lot and do it efficiently. Weak currencies reflect the opposite.
This means that in a highly dollarized economy, countries that rely heavily on imports, consume more than they produce, and export little value will always struggle. Their currencies weaken not because of bad luck, but because the global system rewards production and punishes dependence.
He therefore joins the campaign of other economists championing the call for the country not to focus on only stabilizing the currency without fixing the underlying economy. This is like treating a fever without addressing the infection. The fever may go down briefly, but it always returns.
“If a country does not focus relentlessly on increasing the amount of work it does, meaning GDP, or the efficiency with which it does that work, meaning productivity, then its currency becomes hostage to forces entirely outside its control. Its fate is determined not by domestic effort but by how advanced economies trade with one another and by what that implies for the dollar. A country can manage against that in the short-term but, in the long-term, you’ve got to show your work and your worth,” Dr. Kwapong explained.
He added, “That is not a moral failing. Money, at the end of the day, is still just a claim on labor and output. Ignore that reality, and the exchange rate will remind you, again and again, who is really doing the work. So if, as a country, you do not focus on how to increase your work (GDP) or effort (Productivity), the value of your currency will always be at the mercy of how the advanced countries trade among themselves…. basically what determines the dollar value.”
