Ofori, F. (2011): Sources of International Economic Spillovers to Ghana's Economic Growth.
Download (307kB) | Preview
In a world where policy co-ordination among countries is paramount, the growth of one depends on the behaviour of another in terms of policy instruments being pursued. One important question this study sought to answer was whether international economic spillovers emanating from all trading partners mattered for Ghana’s growth. The study therefore investigated the spillover effects emanating from three of the eight key trading partners of Ghana, namely, U.S.A., China and Nigeria. The study was conducted over the variables; technology diffusion; inflation rates and GDP growth of trading partners; labour; and capital, using annual data from 1980 to 2009. The methodology used involved estimating a growth equation for Ghana, capturing the effects and specific sources of spillovers from trading partners. An autoregressive distributed lag (ARDL) model and a vector autoregressive (VAR) model were used in arriving at various spillover effects from trading partners.
The results showed that capital, inflation rates of U.S.A, and China’s GDP contributed significantly to Ghana’s GDP growth both in the long-run and the short-run. High spillover effects were observed to emanate from countries with high GDP growth. Another interesting result emphasized the fact that annual GDP growths are independent of each other. Finally, it was observed that spillover effects generally subsided after about fifteen years of persistent shocks.
|Item Type:||MPRA Paper|
|Original Title:||Sources of International Economic Spillovers to Ghana's Economic Growth|
|Keywords:||ARDL, Economic Growth, Ghana, International Economic Spillovers, VAR|
|Subjects:||F - International Economics > F1 - Trade > F15 - Economic Integration
F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies
|Depositing User:||FRANK OFORI|
|Date Deposited:||27. Apr 2011 07:00|
|Last Modified:||29. Apr 2015 01:59|
Aarle, B.V., Weyerstrass, K. (2008), “Economic Spillovers, Structural Reforms and Policy Coordination in the Euro Area”, Physica-Verlag Heidelberg, p.3.
Arora, V., Vamvakidis, A., (2005). “How Much Do Trading Partners Matter for Economic Growth?” IMF Staff Papers, Vol. 52 No. 1, pp. 24-25.
Aryeetey, E., Harrigan, J. (2000), Macroeconomic & Sectoral Developments Since 1970; in Economic Reforms in Ghana, The Miracle & The Mirage, Africa World Press, Trenton, NJ (2000).
Aten, B. (1996), “Evidence of Spatial Autocorrelation in International Prices”, Review of Income and Wealth, Vol. 42(2).
Beck, T., Levine, R., Loayza, N. (2000), “Finance and the Sources of Growth”, Journal of Financial Economics, Vol. 58, pp. 261-300.
Bleaney, M., Castilleja-Vargas, L., (2007). “Regional Growth Patterns and Growth Contagion”. Journal of Economic Studies. Vol. 34, No. 1, pp. 4-7.
Brown, R. L., Durbin, J., Evans, J. M. (1975), “Techniques for Testing the Constancy of Regression Relationships over Time”, Journal of the Royal Statistical Society, B 37, 149–163.
Bullard, J., Keating, J. (1995), “The Long-Run Relationship between Inflation and Output in Post-War Economies”, Journal of Monetary Economics, 36, 477-496.
Chenery, H., Robinson, S., Syrquin, M, (1986), “Industrialization and Growth: A Comparative Study”, New York: Oxford University Press.
Clarida, R., Gali, J. (1994), “Sources of Real Exchange Rate Fluctuations: How Important are Nominal Shocks?” National Bureau of Economic Research Working Paper, No. 4658 (February).
Clemens, M., Williamson, J. (2004), “Why Did the Tariff-Growth Correlation Reverse After 1950?” Journal of Economic Growth, Vol. 9, No. 1.
Conley, T.G., Ligon, E. (2002), “Economic Distance and Cross-Country Spillovers”, Journal of Economic Growth, Vol. 7, No.2 (June), pp. 157-187.
De Bondt, R., Henriques, I. (1995), “Strategic Investment with Asymmetric Spillovers”, The Canadian Journal of Economics / Revue canadienne d'Economique, Vol. 28, No. 3 (August), pp. 656-674.
De Long, B., Summers, H.L. (1991), “Equipment Investment and Economic Growth”, Quarterly Journal of Economics, Vol. 106, No. 425 (May), pp. 445-502.
Duasa, J. (2007), “Determinants of Malaysia’s Trade Balance: An ARDL Bound Testing Approach”,Journal of Economic Corporation, 28-3, 21-40.
Edwards, S. (1998), “Openness, Productivity and Growth: What Do We Really Know?” Economic Journal, Vol. 108, pp. 1358-1398.
Fagerberg, J. (1994), “Technology and International Differences in Growth Rates”, Journal of Economic Literature, Vol. 32, No. 3. (September), pp. 1147-1175.
Fischer, S. (1993), “The Role Macroeconomic Factors in Growth”, National Bureau of Economic Research Working Paper, No. 4565.
Funk, M. (2001), “Trade and International R&D Spillovers among OECD Countries”, Economic Journal, Vol. 67, No. 3, (January), pp. 725-736.
Ghana Statistical Service: Revised Gross Domestic Product (GDP) Estimates for 2009, Statistical Newsletter, No. B12-2003.
Guitián, M. (1992), “Rules and Discretion in International Economic Policy”, Occasional paper, International Monetary Fund, ISSN 0251-6365; no. 97, p.1975.
Hadass, Y.S., Williamson, J.G. (2003), “Terms-of-Trade Shocks and Economic Performance, 1870-1940: Prebisch and Singer Revisited”, Economic Development and Cultural Change, Vol.51, No. 3 (April), pp.629-656.
International Monetary Fund (2010), Direction of Trade Statistics (DOTS).
International Monetary Fund (2010), World Economic Outlook (October).
ISSER (2006), The State of the Ghanaian Economy, Institute of Statistical, Social & Economic Research, University of Ghana, Legon, Ghana.
Kuznets, S. (1973), “Modern Economic Growth: Findings and Reflections”, The American Economic Review, Vol. 63, No. 3 (June), pp. 247-258.
Kwiatkowski, D., Phillips, P. C. B., Schmidt, P., Shin, Y. (1992), “Testing the Null Hypothesis of Stationarity Against the Alternative of a Unit Root: How Sure Are We That Economic Time Series Have a Unit Root?” Journal of Econometrics, 54, 159–178.
Li, M. (2006), “Inflation and Economic Growth: Threshold Effects and Transmission Mechanisms”, Department of Economics, University of Alberta, Working Paper.
Lutkepohl, H. (1991), Introduction to Multiple Time-Series Analysis, (Berlin: Springer-Varlag).
Obiora, K.I. (2009), “How Much Do Trading Partners Matter for Nigeria’s Growth? A Contribution to the Debate on Decoupling and Spillovers”, Journal of Economic and Monetary Integration, Vol. 9, No. 1, pp. 1-25.
Oduro, A.D. (2000), Performance of the External Trade Sector Since 1970; in Economic Reforms in Ghana, The Miracle & The Mirage, Africa World Press, Trenton, NJ (2000).
Ono, Y. (2001), “International Spillover of Economic Fluctuations: A Dynamic Optimization Approach”, Journal of Economic Literature, F41, F42, The Institute of Social and Economic Research, Osaka University, Discussion Paper, No. 527. Osaka: Japan.
Pöyhönen, P. (1963), “A Tentative Model for Volume in between Countries”, Weltwirtschaftliches Arhive, Vol. 90, 91-113.
Rahman, S., Serletis, A. (2010), “The Asymmetric Effects of Oil Price Shocks”. Unpublished work.
Smith A. (1776), “An Inquiry into the Nature and Causes of The Wealth of Nations”, Harriman House Ltd. (Published in 2007), Petersfield: Hampshire, pp. 288, IX.
Sohn, C.H. (2005), “Does the Gravity Model Explain South Korea’s Trade Flow?” The Japanese Economic Review, Vol. 56 (4).
Sutter, R. (2003), “Why Does China Matter?” The Washington Quarterly, Winter 2003-04, 27, 1, pp. 75-89.
The Budget Statement and Economic Policy of the Government of Ghana (Republic of Ghana: 2000 Financial Year).
The Budget Statement and Economic Policy of the Government of Ghana (Republic of Ghana: 2009 Financial Year).
The World Bank Group, (2010), Africa Development Indicators (March).
The World Bank Group, (2010), World Development Indicators and Global Development Finance, (September).
Tinbergen, J. (1962), “Shaping the World Economy: Suggestions for an International Economic policy”, The Twentieth Century Fund, New York, New York.
Verbeek, M. (2004), “A Guide to Modern Econometrics”, 2nd Ed. John Wiley and Sons Ltd.,p. 271. Chichester: England.
Wang, Y., Yao, Y. (2003), “Sources of China’s Economic Growth 1952-1999: Incorporating Human Capital Accumulation”, China Economic Review, 14, 32-52.
Wei, Y., Liu, X., (2006), “Productivity Spillovers from R&D, Exports and FDI in China’s Manufacturing Sector”. Palgrave Macmillan Journals, Journal of International Business studies, Vol. 37, No. 4 (July), pp. 544-557.
Xu, B. (2000), “Multinational Enterprises, Technology Diffusion, and Host Country Productivity Growth”. Journal of Development Economics, Vol. 62, pp.477-493.