Ghana’s Economic Growth in perspective: A time series approach to Convergence and Growth Determinants
Ghana’s Economic Growth in perspective: A time series approach to Convergence and Growth Determinants
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Date
2010-05-24
Authors
Baafi Antwi, Joseph
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Publisher
Munich Personal RePEc Archive
Abstract
Economic growth around the world has not been equal for a long time. Some
economics grow faster while others grow slower. But economists have predicted that
the slower growing economics will eventually converge with the faster growing
economy as some point in the future. This is known as the convergence hypothesis. In
this study, we test this hypothesis for Ghana and the Western Europeans countries with
UK been a proxy for these countries, using time series data to determine whether or not
it holds. We determine how fast or slow this convergence process is by using the
returns to scale concept on Ghana’s economy and latter account for factor that
determines economic growth in sectors. The study supported the null hypothesis of
convergence i.e. Ghana is catching up with the Western European countries. The study
also shown that Ghana growth accounting exhibit decreasing returns meaning
convergence is relatively slow and also signifies that Ghana is not on a balanced growth
path (this refers to the simultaneous, coordinated expansion of several sectors of the
economy). The study showed a negative relationship between GDP and labour both in
the long run and short run relationship. Again the study showed a positive relationship
between GDP and capital, Agric and Industrial sector. Lastly, the study showed a
negative relationship between GDP and AID and Service in the long run and positive
relationship in the short run.
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Citation
Baafi Antwi, J. (2010). Ghana's Economic Growth in perspective: A time series approach to Convergence and Growth Determinants.