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The Anchor of Economic Growth is the Meeting Point of International Trade And Productivity: The Eye of Ghana’s Economy
Article Number: SIS709342AI040325
4th March, 2025
Author(s):
Josephine Adwoa Yeboah, Ernest Kay Bakpa
Abstract:
International trade has a significant impact on Ghana's productivity and economic growth through various channels. Ghana's exports, namely gold, oil, and cocoa, have essentially propelled its economic growth and foreign exchange gains through the export-led growth strategy. The study employed annual time-series data from the World Bank database on Ghana from 1970 to 2020, utilising OLS, structural equation analysis techniques, and Granger causality test to analyse the data. Structural equation models utilised investment, consumption, and government expenditure as indicators of economic growth, exports and imports as indicators of international trade, and labour and capital as productivity measures. The findings showed that there was an inverse correlation between international trade and economic growth over both the long term and the short-term period in the Ghanaian economy. as a result, international trade also had a negative impact on economic growth. However, productivity had a beneficial influence on economic growth. The analysis demonstrated that the negative effect of international trade on economic growth was primarily attributable to the high volume of imports into the economy compared to the low volume of exports. The study also confirmed the Granger causality result, illustrating that all the variables had the ability to exert an impact on one another. We recognize that a strategic investment in the production sector of the Ghanaian economy will lead to long-term economic growth and enhance international trade.