Determinants of Bilateral Trade Between Ghana and Other Members of the Economic Community of West African States

Abstract

We analyze bilateral merchandise trade flows between Ghana and the other 14 members of the Economic Community of West African States (ECOWAS). The analysis involves the use of the modified gravity model based on most recent data from 1995 to 2006. We establish that per capita gross domestic product of ECOWAS countries and the population of these countries drive trade levels between Ghana and these countries in a positive manner as expected from the theoretical gravity model. The physical distance between Ghana and ECOWAS member countries has the expected negative impact on trade flows with longer distances reducing trade flows. Political instability in ECOWAS countries hinders bilateral trade between Ghana and these countries. We also establish that Ghana trades more intensively with French-speaking countries than other countries in the ECOWAS region. This result is partly due to Ghana sharing its border with three French-speaking countries. However the trade volumes between Ghana and other French-speaking countries in the Region with which it does not share borders are also significant. The widespread teaching and learning of the French language in Ghana is one of the recommendations of the study.