International Economics

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THE INCIDENCE AND DYNAMICS OF INTRA-INDUSTRY TRADE BETWEEN GHANA AND ECOWAS
(University of Ghana , Legon, 2012-06-06) OFFEI, EMMANUEL LARBI
Since intra-industry trade (IIT) was first noticed in the 1960s, theoretical and empirical studies on this type of trade have being growing rapidly. Very few studies however, have investigated IIT in the Economic Community of West African States (ECOWAS) region. This current study attempts to bridge the literature gap by examining the incidence and determinants of IIT between Ghana and its ECOWAS trading partners using empirical trade data from 2004 to 2010. The results show evidence of IIT between Ghana and ECOWAS although it is low as compared to other regions. Sectors found to exhibit high incidence of IIT are transportation, animal products and chemicals industries. At the country level, Cote d’Ivoire has the highest IIT incidence with Cape Verde and Guinea Bissau having no IIT with Ghana. The determinants of IIT are estimated using the gravity model and the results indicate that per capita income, dissimilarity in per capita income, foreign direct investment, and common language affect IIT positively while gross domestic product and geographic distance influence IIT negatively. The main hypothesis guiding this study is that similarity in per capita income between Ghana and the ECOWAS trading partners stimulates IIT. This hypothesis is however rejected because the study finds a positive correlation between dissimilarity in per capita income and intraindustry trade instead of the a priori expectation of negative sign. The study recommends that policies should be introduced to encourage the expansion of the manufacturing sector in member countries. Exchange rate variability and bottlenecks in the level of traffic flow along interstate corridors must be removed to enhance intra-industry trade within the subregion.
DETERMINANTS OF ECONOMIC GROWTH IN BOTSWANA THROUGH THIRLWALL’S MODEL
(University Of Bostwana, 2020-05-06) BAITSILE, PEO NNANG NAIMA
The purpose of this paper is to estimate economic growth of Botswana. The study relies on the Thirlwall’s model and its extension to estimate the price and income elasticities of export and import demand using the productivity data for the period of 1980-2016. The estimation for this work is based on the Auto-Regressive Distributed Lag, (ARDL), modeling to estimate the price and income elasticities, which is based on the conventional equations of exports and imports demand. The practical application of the estimated elasticities provides insights about the determinants of the economic growth of the Republic of Botswana, thus, the Thirlwall’s hypothesis of balance of payments constrained growth is used. The results from the imports and exports equations showed the following. The estimated price elasticities of demand for imports and exports were unexpected and statistically insignificant. The estimated income elasticities of demand for imports and exports were as expected and statistically significant. From the extended imports and exports equations, the price elasticities of imports were unexpected and statistically significant. The income elasticity of imports and exports were as expected and statistically significant. Practical applications of the estimated price and income elasticities of demand for imports and exports gave the economic growth rates of 5.63 percent and 4.97 percent respectively for the Thirlwall and extended Thirlwall’s model with the export growth rate of 4.87 percent. The overall results indicated that Thirlwall hypothesis holds in determining Botswana’s economic growth rate. This correlated with the study done by Matsheka in 1998, where when calculating Botswana’s economic growth rate, the results showed that Botswana’s economic growth rate could be predicted using the Thirlwall’s model.
DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN SELECTED SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC) FOR THE PERIOD 2001 to 2010
(University of Zimbabwe, 2014-05-06) MUTUNGWAZI, HAPPY
The Southern African Development Community (SADC) regional bloc has been undertaking investment reforms with a view of creating an enabling and conducive environment for all their member states to increase Foreign Direct Investment (FDI) inflows. FDI is preferred to because of its arguable economic benefits among them that it closes domestic resource gaps. Furthermore, FDI can reduce unemployment levels common in several SADC nations. FDI introduces managerial skills through technological transfers, as well as producing export enhanced economic developments. In view of the foregoing, many SADC countries have promulgated various policies that can incentivise foreigners to pour FDI inwards. Despite these efforts, studies have shown that FDI levels are dismally low as compared to the rest of Africa. Efforts to establish the reason for such poor FDI inflows have been extensively carried out in many studies. However, these studies omit some recent key noneconomic determinants that affect FDI inflow to the SADC bloc. This study analyses the determinants of FDI inflow to the SADC bloc for the recent decade of 2001 to 2010 using the panel data methodology. Our study estimated macroeconomic determinants of FDI in the SADC region namely: rates of interests, current account balances, gross domestic product, national external debt, and exchange rates as well as institutional determinants of FDI namely: political stability, control of corruption and voice and accountability issues. Interest rates, exchange rates, and gross domestic product variables were all found to be important determinants of FDI in the region. All institutional variables were proved to be essential determinants of FDI in the SADC bloc. The study concluded that SADC FDI inflows are positively influenced by a growing demand in terms of an expanding SADC bloc coupled with a stable single currency exchange rate. Policies that advocate for a bigger integrated common economy and the adoption of single currency are the best way in attracting large FDI inflows to SADC. SADC states should, in addition pursue policies that take into considerations the effective uphold of political stability and absence of violence, measures to nip out corruption and a tolerant governance structure. The unstable macroeconomic environment obtaining in many SADC states such as high interest rates are negatively affecting FDI inflows to the region.
GROWTH CONVERGENCE IN SOUTHERN AFRICAN CUSTOMS UNION (SACU): A DYNAMIC PANEL APPROACH
(University Of Bostwana, 2017-06-06) Tshireletso, Baboloki
This study examines the growth convergence within SACU economies using the unbalanced panel dataset for the period of 1992 to 2015. The study used a dynamic panel approach to check if less developed countries in SACU registered more growth than more developed countries in order to converge to a common steady state. In support to the main objective of the study we used the two GMM estimators (that is the one-step system GMM and one-step difference GMM models) to investigate growth convergence. Validity of these models is confirmed by the second order serial correlation test and Sargan test for overidentifying. The results shows that real GDP per capita as a measure of growth is significant in determining convergence for both the one-step system GMM and one step difference GMM estimators. This implies that within the region less developed countries attained growth in order to converge to their own steady state within the period of 1992 to 2015.The results has confirmed to conditional beta convergence and absolute beta convergence for SACU countries. The policy implication of this finding is that policy makers must cautiously implement economic development policies that aim to promote growth of GDP per capita and reduce on areas that discourage the growth of the country in order to converge. Using the one-step system GMM model shows that the highest rate of convergence is about 9% within the SACU region while the highest rate of convergence is about 5% using one-step difference GMM model. This difference is supporting literature that suggests that the system GMM produces more efficient estimates. The results for the one-step system GMM shows more significant coefficients for variables than the difference GMM estimator for panel estimation. Foreign Direct Investment (FDI), trade openness, physical capital and tertiary school enrollment positively and significantly affect economic growth and convergence as expected. Therefore this implies that for FDI, the more the country is attracting foreign investors, this augments the levels of domestically human capital. For trade openness (OPEN), the more the individual country is open to trade the higher the gain in productivity growth due to increase in flows of goods and services. Therefore these cases promote high economic growth in order for countries to converge.
DETERMINANTS OF EXPORT DIVERSIFICATION IN GHANA
(University of Cape Coast, 2019-04-22) GBOLONYO, EMMANUEL YAO
The present study examines the determinants of export diversification in Ghana. For this purpose, Theil index is used to estimate the degree of export diversification. The study used annual time series data from 1983 to 2016 to estimate the structural, economic/policy and macroeconomic determinants of export diversification within the Auto Regressive Distributed Lag (ARDL) framework. The results of this study indicated that GDP per capita, real effective exchange rate, trade openness, foreign direct investment and infrastructure, improve export diversification in both the long-run and short-run while terms of trade enhances specialisation. Based on the findings of this study, the study recommended that government should take advantage of the fall in Cedi value by exporting more products to markets with high demand. The Ministry of Trade and Industry should also develop a competitive capacity for trade in order to eliminate principal domestic barriers to international business development, increase its investment in basic and trade-related infrastructure. It is also recommended that the government through the Ghana Investment Promotion Center should invest in promoting a broader variety of FDI opportunities to investors, while also developing other sectors of the economy in order to boost diversification.

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