IMPACT OF NONTRADITIONAL AGRICULTURAL EXPORTS ON GHANA’S ECONOMIC GROWTH

Abstract

The study examined the impact of nontraditional agricultural exports on Ghana’s economic growth using secondary data obtained from World Development Indicators and FAOSTATS from 1961 to 2019. The empirical investigation was based on the estimation of linear and nonlinear ARDL models. The trend analysis revealed a declining trend in growth of NTAE. The ARDL/NARDL bounds test revealed presence of cointegration between real GDP, NTAE, gross capital formation, exchange rate, inflation and FDI. The results also revealed that NTAE, exchange rate and gross capital formation have significant positive impact on the economic growth of Ghana whiles the other variables such as inflation and FDI exhibit significant negative relationship with economic growth. The study further identified real GDP, exchange rate and inflation as significant factors that affect the growth of Ghana’s NTAE in long run. IRF results indicate that innovations (shocks) to the selected macroeconomic variables exhibit both positive and negative (asymmetric) impact on the growth of Ghana’s NTAE. The study recommended that Ghana Export Promotion Authority takes immediate steps such as exhibitions, incentives, trade fairs and other available means to reverse the decelerating trend in the growth of NTAE in Ghana. The government flagship programme 1D1F should be focusing on establishing agricultural processing factories that will add value to the products of NTAEs for export market, Ministry of Food and Agriculture should increase the agricultural sector investment to propel economic growth. To Bank of Ghana, the study recommended that the bank work towards achieving a stability of the cedi as depreciation causes huge negative impact on the country’s economic growth. The study further recommended to GIPC to appraise all the sectors of the economy and identify the critical areas that need foreign investment and make it attractive for foreigners to invest in order to revert the negative impact of FDI on Ghana’s economy.