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Modelling the effect of climate change and globalisation on the manufacturing sector of Ghana

Yeboah Asuamah, Samuel (2016): Modelling the effect of climate change and globalisation on the manufacturing sector of Ghana.

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Abstract

The double impact effect of climate change and economic globalisation on the manufacturing sector is examined in the research for the period 1961-2013 for Ghana using annual time series data. The augmented Dickey Fuller (ADF) and Kwiatkowski–Phillips–Schmidt–Shin (KPSS) test were used to examine the nature of the effect of shock to climate change and economic globalisation on the manufacturing sector. The ordinary Least Square (OLS) method was used to examine the effect of climate change and economic globalisation on the manufacturing sector. The Johansen framework was use to establish significant long run equilibrium relationship among the variables. The vector error correction model was to trace the reconciliation of the transitory deviation from the short run disequilibrium to long run equilibrium. The granger-predictability test results revealed evidence of bidirectional causality between climate change and manufacturing sector productivity and between economic globalisation and manufacturing sector productivity. The findings of the study indicate that reducing the effect of climate change and economic globalisation will not have negative effect on the productivity of the manufacturing sector. Future studies should examine the effect of structural change on climate change and economic globalisation on the manufacturing sector. In addition, other proxies of economic globalisation and climate change should be modelled.

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