Determinants of Ghana’s bilateral export: Does exchange rate variability matter?
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Date
JUNE, 2016.
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Abstract
The purpose of this study was to empirically analyse the internal and external factors
that drives Ghana‟s bilateral exports. This was to take a critical look at whether
variability in Ghana‟s exchange rate really matters in Ghana‟s bilateral export flow.
Since the external value of the Ghana cedi has been unstable and persistent increase
depreciation against major currencies for the past two decades. The study employed a
panel data spanning from 1995 to 2014 and observed 20 of Ghana‟s trading partners. An
augmented Gravity model and panel data estimation techniques such as the Pooled
Ordinary Least Squares (POLS), Fixed effects and Random effects models were the
methodology used in the estimation. The result revealed that the real bilateral exchange
rate is negative and insignificant, however, GDP is positive and statistically significant.
Trade openness, infrastructure and Foreign Direct Investment (FDI) are all having
positive relationship with total trade of export but not statistically significant. Distance
and language as well as the population of Ghana all have negative relation with the total
bilateral export flow. As implied by the results, Bank of Ghana must ensure that
variations in exchange rate are relatively predictable, minimal and less detrimental. The
country must envisage an economic growth and the reduction of trade barriers as well as
improvement in infrastructure which are require to advance the export trade of the
country.
Description
A Thesis Submitted to the Department of Economics, Kwame Nkrumah University
of Science and Technology, in partial fulfillment of the requirements for the award
of
Master Of Science degree in economics
Faculty of Social Science, College of Humanities and Social Sciences
June, 2016.