Issues and challenges of export diversification in Ghana: firm level analysis

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Date
November, 2016
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Abstract
The Diversification-Led Growth Hypothesis predicts that countries can make significant gains from international trade if they diversify their economies. In the light of this, Diversification of Export was one of the explicit aims of the Structural Adjustment Programme launched in 1986 in Ghana. NTEs were to be instrumental in restoring Ghana’s BOP by increasing total exports earnings. Available statistics indicate that the performance of the sector against the traditional sector is below expectation. The study therefore examined the issues and challenges of export diversification at the firm level. SWOT analysis and descriptive statistical tools and analysis were used to examine the policy reforms and trends of export diversification respectively. The Herfindhal and Entropy Indexes were also adopted to determine the degree of specialization in the NTE sector. Finally, a survey work was carried out and using the, Best-Minus-Worst Scores, challenges confronting the NTE sector at the firm level were identified. It became evident that, in spite of many policy reforms by successive governments, the sector’s contribution to total export and GDP growth has been modest because of low supply capacity and ad hoc implementation of policy reforms. The processed and semi-processed sub-sector holds promise for the country’s export diversification drive. The NTE sector is highly specialized with agriculture and handicraft sub-sectors still underdeveloped. The sector is also constraint by access to credit, high tariffs and taxes and meeting stringent international standards. It was recommended that reforms should be multi-sectorial and involve all levels of the Ghanaian society. Also, there should be re-diversification into agriculture and handicraft sub-sectors and further diversification into products with huge prospects to increase export quantities and values such as cashew nut. Finally, there should be improvement in access to credit, reduction of tariffs and taxes and Ghanaian exporters should familiarize themselves with the standards required by their foreign partners.
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A Thesis submitted to the Department of Economics of the College of Social Sciences and Humanities, Kwame Nkrumah University of Science and Technology, in partial fulfillment of the requirement for the award of Master of Philosophy Degree in Economics,
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