School of Social Sciences
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Item Public Debt, Investment And Economic Growth In Ghana(University Of Ghana, 2021-09) Dodoo, A.This thesis was motivated by the persistent growth in Ghana’s debt per GDP above the 60 percent sustainability threshold prescribed by the West African Monetary Zone (WAMZ) coupled with its low performance in terms of debt servicing. These two situations raise more concerns on how the country’s level of public debt can affect both investment and economic growth. Several studies carried out to investigate the relationship between the country’s level of debt and economic growth have yielded many results. This thesis provides an updated debtgrowth nexus, as well as investigating the use of investment as the basic channel through which public debt affects investment. Guided by the neoclassical growth model, the effect of public debt on economic growth is dependent on the effectiveness of investment made with the borrowed funds and the part of investment crowded out due to the macroeconomic effect of high debt on interest rate and investment. Based on the results obtained from the unit root test, the ARDL cointegration method was used to estimate the effect of public debt on both economic growth and investment in Ghana. From the estimated results of the thesis, there was a negative relationship between external debt and economic growth in both the short run and long run growth equations. In these growth equations, no relationship was established between debt servicing and economic growth. In the estimated short and long run investment models, no relationship was found between external debt and investment, as well as debt servicing and investment. These findings imply no “crowding out” effect for Ghana. Rising from the thesis’s results, it is recommended that government channels borrowed funds into productive ventures of the economy as this will help in generating output to finance its debt. In order to control the persistent rise in external debt, structural programs must be implemented to ensure efficient mobilization of domestic funds. It is also recommended that government pays serious attention to revising the export led growth strategy, adheres strictly to macroeconomic policies that ensures a stable and favourable exchange rate in order to propel trade and investment.Item Defence Spending and Economic Growth: Empirical Evidence from Ghana(University Of Ghana, 2019-07) Seidu, M.A.This study attempted to determine the relationship between real defence expenditure and real aggregate output for Ghana. The limited nature of existing literature for the case of Ghana and reducing defence expenditure over the years in the absence of pressing security issues are some of the reasons for undertaking this study. To achieve this, the Auto-Regressive Distributed Lag (ARDL) cointegration approach for time series analysis is employed on a data set from1980 to 2017. Before the ARDL model was employed, seasonality and unit-root tests were used to determine the specific characteristics of the variables. A cointegration relationship was found among the estimating variables, hence long and short run ARDL models were estimated. The error correction term in the short run model was negative, supporting the ARDL bounds test for cointegration. The results indicated an insignificant impact of defence expenditure on aggregate output in both periods. Although insignificant, it supported the findings of other studies. Diagnostics test were used to confirm the stability and robustness of the model. A granger causality test was also employed to determine the direction of the causal relationship existing between the variables. This test supported the findings of the ARDL estimations by discovering that defence and government expenditure do not Granger cause output. However, in the long run model, interest rates, labour and the lag of output were the only positively significant variables. Whilst the past values of aggregate output were the only significant variable in the short run. It was recommended that the GAF increases services such as manufacturing, construction, education, and health. Since it has physical and human capital that may not be available to the civilian sector. The government was also advised to create an environment that promotes growth and development which will influence government expenditures which will then affect the economy of Ghana as postulated by Wagner’s law.Item Economic Growth and Energy Intensity in Sub-Saharan Africa(University Of Ghana, 2019-07) Frazer, M. M.Energy use is the primary source of greenhouse gas (GHG) emission from the industrial sector with carbon dioxide (CO2) accounting for more than 90 per cent of CO2 equivalent of GHG, globally and in most countries. The fact that the Sub-Saharan African countries only contribute 4% of global greenhouse gas emissions does not in any way diminish the dangers that climate change poses to the region. Reduction in energy intensity has been advocated as a means of mitigating climate change and energy insecurity. Using a panel data spanning 1990-2015, this study investigates the energy intensity and economic growth relationship, causality, and convergence patterns in Sub-Saharan Africa. The Generalised Methods of Moments model estimation shows a strong negative relationship between energy intensity and economic growth. The Granger-causality test revealed a unidirectional causality from economic growth to energy intensity. The study uses conditional beta and sigma convergence criterion to test for convergence in the region, and the results revealed that it is converging to a lower rate of energy intensity. The study, therefore, recommends that policies that will increase growth are implemented.Item The Impact of Public Expenditure on Economic Growth in Ghana (1970-1998)(University Of Ghana, 2002-06) Nketiah-Amponsah, E.The government's fiscal policy involves the use of its expenditure and taxation policies to achieve desired targets; this paper is however, based on the former. Both the theoretical and empirical literature surrounding the relationship between government activity and economic growth remain controversial to this day. Empirical works including those of Ram (1986), Landau (1983, 1986) and Rubinson (1977) among others have produced mixed results. This study analyses the contribution of government expenditure to the economic growth process in Ghana between 1970-1998. The results indicate that the aggregate government expenditure variable is negatively and significantly associated with economic growth. Although, the empirical results on the impact of government on economic growth is inconclusive, a negative association with Ghana's economic growth was unexpected but explicable. The choice of the size of government follows the approach adopted by Ram (1986). The composition of government expenditure also has mixed impact on Ghana's economic growth over the stipulated period. The growth rates of the expenditure components (incrementalist approach) were employed in this research. The results indicate that education expenditure and expenditures on roads and waterways have the expected positive and significant impact on Ghana's economic growth over the period under consideration. It is also clear that in a labour surplus economy such as Ghana, the neo-classical labour force variable is not an important determinant of growth. In addition, defence expenditure had a negative but insignificant impact on economic growth. The other growth variables introduced in the model such as investment and export had the expected positive signs in all the regressions undertaken. The study reveals that the most robust variable for Ghana's economic growth is investment. The proxy for the labour force variable (the rate of growth of population) had the expected positive association with economic growth but insignificant. Interestingly, the two political economy variables- political instability and the nature of government (democracy or autocracy) are statistically insignificant in explaining Ghana's economic growth (especially as the last seven years of the data set is biased towards democracy).Item The Impact of Public Expenditure on Economic Growth in Ghana (1970-1998)(University of Ghana, 2002-06) Nketiah-Amponsah, E.The government's fiscal policy involves the use of its expenditure and taxation policies to achieve desired targets; this paper is however, based on the former. Both the theoretical and empirical literature surrounding the relationship between government activity and economic growth remain controversial to this day. Empirical works including those of Ram (1986), Landau (1983, 1986) and Rubinson (1977) among others have produced mixed results. This study analyses the contribution of government expenditure to the economic growth process in Ghana between 1970-1998. The results indicate that the aggregate government expenditure variable is negatively and significantly associated with economic growth. Although, the empirical results on the impact of government on economic growth is inconclusive, a negative association with Ghana's economic growth was unexpected but explicable. The choice of the size of government follows the approach adopted by Ram (1986). The composition of government expenditure also has mixed impact on Ghana's economic growth over the stipulated period. The growth rates of the expenditure components (incrementalist approach) were employed in this research. The results indicate that education expenditure and expenditures on roads and waterways have the expected positive and significant impact on Ghana's economic growth over the period under consideration. It is also clear that in a labour surplus economy such as Ghana, the neo-classical labour force variable is not an important determinant of growth In addition, defence expenditure had a negative but insignificant impact on economic growth. The other growth variables introduced in the model such as investment and export had the expected positive signs in all the regressions undertaken. The study reveals that the most robust variable for Ghana's economic growth is investment. The proxy for the labour force variable (the rate of growth of population) had the expected positive association with economic growth but insignificant. Interestingly, the two political economy variables- political instability and the nature of government (democracy or autocracy) are statistically insignificant in explaining Ghana's economic growth (especially as the last seven years of the data set is biased towards democracy).Item Regional Integration and Economic Growth Evidence from ECOWAS(University Of Ghana, 2020-10) Razanaparany, J.R.Since its inception, the performance of the ECOWAS regional integration in terms of economic growth has not been encouraging. Numerous reforms were implemented to enhance the level of integration in the region including the revision of the ECOWAS of 1993. This study aims to examine the effect of the regional integration on economic growth, and, particularly, the effect of the revised treaty of 1993 on economic growth in the ECOWAS. We estimate a standard growth model using a panel dataset on 14 ECOWAS countries over 44 years (1975-2019) by a fixed effects regression with the Driscoll-Kraay Standard Errors method. This technique provides consistent and robust estimators, overcomes heteroscedasticity, autocorrelation, and cross-sectional dependence that might generate bias on statistical results. The study found that regional integration exhibits a positive relationship with economic growth in the ECOWAS. Hence, ECOWAS economic growth is stimulated by regional integration through openness to international trade and physical capital stock accumulation while FDI and human capital accumulation were found to be not statistically significant at level. Besides, the effect of the ECOWAS revised treaty of 1993 on economic growth was positive. This reform was been associated with an increase in the ECOWAS GDP growth rate by 1.627 percent. The findings, the study recommends the implementation of policies toward a more open economy into international trade, the establishment of the business environment to attract FDI and promotes domestic investment, and lastly, the implementation of reforms to deepen regional integration.Item Urbanization, Economic Growth and Poverty Nexus in Selected Countries in Sub-Saharan Africa(University Of Ghana, 2020-10) Ahimah-Agyakwah, S.Urbanization is recognized as a key driver of rapid economic growth, structural transformation and poverty reduction. The enormous body of both theoretical and empirical knowledge widely supports the idea of a positive relationship between urbanization and economic growth. However, at the core of the existing debate is the causal direction. The first part of the study investigated the causal relationship between urbanization and economic growth in Sub-Saharan Africa (SSA) from the two dominant viewpoints in the literature namely, urbanization as an engine of economic growth and urbanization as a product of economic growth. The second part investigated the poverty reduction effect of urbanization using the Poverty Headcount ratio and Poverty Gap. The data for the study was sourced from Penn World Tables Version 9.1; the United Nations’ “World Population Prospects: The 2018 Revision” and “World Urbanization Prospects 2019”; and the World Bank’s World Development Indicators database. The sample is an unbalanced panel data sub-divided into 5-year time intervals over the period 1970-2019 for up to 30 rapidly urbanizing countries selected from all the four sub-regions in SSA. This dynamic study employed the one-step system generalized methods of moments (SYS-GMM1) to estimate the three elasticities namely urbanization elasticities of growth, growth elasticities of urbanization and urbanization elasticities of poverty reduction. The estimated urbanization elasticities of growth and growth elasticities of urbanization suggest a positive and non-linear relationship between urbanization and economic growth in both the short run and long run. The comparative analyses of the results at both growth rates and levels also showed a strong bi-directional causation between urbanization and economic growth. This two-way causal relationship is also confirmed by the findings of the Dumitrescu & Hurlin (2012) test of Granger (1969) non-causality in heterogeneous panel data. Furthermore, the estimated urbanization elasticities of poverty show that urbanization in SSA has a positive effect on poverty reduction in both the short run and the long run. Also, the comparative analyses showed that consistently the poverty reduction effect of urbanization is stronger for the Poverty Gap relative to the Poverty Headcount ratio in both the short run and the long run. Notwithstanding, the growth promotion and poverty reduction effects of urbanization are not automatic. They require sound urban planning, policies and enormous investments to achieve. Particularly, for SSA, the expansion of cities has largely been horizontal, resulting in unprecedented and ever-increasing footprint of urbanization that requires enormous investment in urban infrastructure. More so, most infrastructure provisions in cities in SSA have mainly involved retrofitting and this has tremendously increased the associated costs of investment. Furthermore, urbanization in SSA has largely been seen as an undesirable antecedent of a new urban poverty and governments are ambivalent towards it. This has to change for urbanization to be fully embraced with massive resource investment so as to reap its full benefits of productivity growth and job creation. Legal provision and enforcement of private property rights over land and structures are also required. Managing the urbanization process should be seen as an integral component of nurturing growth and development in SSA.Item Debt Sustainability of Emerging Economies in Sub-Saharan Africa(University of Ghana, 2019-07) Owusu, O.J.Every developing economy aims to ensure long term economic growth. To achieve this, they embark on long term development projects which mostly create huge fiscal deficit. Financing the deficit leads to borrowing from both domestic and international markets to supplement the inadequate revenues generated. The excessiveness of borrowing and interest strings due payable mostly result in debt crisis with the possible adverse effect of unsustainability. This thesis examines debt sustainability of twenty-six (26) emerging Sub-Saharan Africa (SSA) economies using data from the year 2000 to 2018. In so doing, it investigates the effect of debt-to-GDP ratio on overall primary balances; analyses the effect of the output gap on the overall fiscal balances; and estimates a threshold value for measuring risk of unsustainable. To achieve these goals, a fiscal reaction function and threshold models were estimated using the System GMM and Hansen (1999) threshold estimator respectively. The results show a statistically significant positive relationship between primary balance and; the debt ratio and the output gap. It was unravelled that although debt ratio increases government revenues, the net effect is deterioration in the primary balances. The threshold estimator showed the existence of a non-linear relationship between sovereign risk of default and the debt ratio. It provided an average threshold value of 17.95 percent of GDP showing that, if the average debt-to-GDP ratio exceeds 17.95% there is a greater possibility of debt default. The study recommends that emerging economies in SSA must demonstrate fiscal discipline in public spending to reduce primary deficits. They must improve upon their domestic revenue mobilization to limit the rate of borrowing. Above all, they should resort to acquiring more concessional loans which are highly secured.Item Services Sector Contribution to Tax Revenue Generation and Economic Growth in Ghana: A Case of the Telecommunication Sub-Sector(University of Ghana, 2018-07) Ninson, R.This study investigates the contribution of the Services sector to total tax revenue and economic growth in Ghana, with particular focus on the Telecommunication subsector. Quarterly time series data for the period 2008 to 2016 was used for the analysis within the Autoregressive Distributed Lagged (ARDL) framework. Additional qualitative information was elicited from key tax administrators to ascertain the challenges confronting tax mobilization in the telecom subsector to authenticate the empirical findings. The findings revealed that there exist short run and long run relationship between the Information, Communication and Telecom tax revenue on total tax revenue and economic growth, suggesting that, revenue from the ICT tax positively influences economic growth in both periods, which implies, the services sector significantly contributes to economic growth in Ghana.. In addition, the ICT revenue in the short run positively affects total tax revenue and economic growth. But, the long run results indicates a negative effect on economic growth and exerts positive influence on total tax revenue. This may be due to government subsidization policy on cost of ICT infrastructure to make ICT services accessible to all. The qualitative aspect of the study showed that some mobile telecoms operators do not honour their corporate tax obligations regularly. Also, given the complexity of the telecom operations, there is a base erosion and profit shifting that makes Telecom companies under estimate taxes For policy purposes, the study suggests that the government should strengthen the tax administrators in Ghana with the needed training and logistics to effectively assess, audit and collect taxes from the ICT and Telecom sector to maximize revenue mobilization. Additionally, GRA should liaise with NCA to foster and sensitize not only the registered telecom operators, but the informal ones. This will help widen the tax net and even with marginal tax rates more revenue will be realized for accelerated economic growth. vItem The Impact of Foreign Direct Investment (FDI) on Economic Growth: A Comparative Study of East and Central Africa.(University of Ghana, 2018-07) Akonnor, K.T.This study analyzes the impact of foreign direct investment (FDI) on economic growth in East and Central Africa between 2000 and 2015. A sample of 24 countries made up of 16 from East Africa and 8 from Central Africa were considered. Data was obtained from World Bank Development Indicators and World Governing Indicators. I employed the pooled Ordinary Least Square (OLS) regression and panel data econometric techniques for the estimations and the findings revealed that FDI positively impacts economic growth in East Africa. Conversely, no impact of FDI on economic growth was found for Central Africa. Other significant factors that impact economic growth from the findings are the level of governance and inflation. The findings from the study suggest that policies aimed at attracting FDI should be embarked on by governments in Central Africa to help improve the inflows of FDI into the region.