The Impact of Trade Policy Reforms on International Trade Tax Revenue in Ghana
Date
2019-07
Authors
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Publisher
University Of Ghana
Abstract
The trade sector is generally considered as one that can set the stage for the development of an
economy, as evidenced by the immense economic developments attained by Japan and China
as a result of their good performance in the trade sectors.
Ghana had hopes of achieving such success in the trade sector owing to the abundance of
natural resources in the country but within 25 years of independence, the economy had cave in
as a result of poor economic performance in the trade sector. Reforms were put in place to
salvage the situation with minimal success.
This study analyses the impact of trade policy reforms on international trade tax revenue in
Ghana from the period 1980 to 2017. The Autoregressive Distributive Lag (ARDL) model is
employed to estimate the long-run relationship among the variables and further, the short-run
dynamics of the variables are examined using the Error Correction Model (ECM). The
empirical results show that whereas trade openness has a positive and significant effect on
international trade tax revenue in both the long-run and short-run models, the average tariff
rate influences international trade tax revenue positively in the short-run but adversely in the
long-run. Also, a Pairwise Granger Causality test is performed to determine the causal
relationship between trade openness, average tariff rate, and international trade tax revenue,
we found unidirectional causality running from trade openness to international trade tax
revenue.
In conclusion, the results suggest that Ghana should utilize the benefits accompanying trade
policy reforms without apprehension about its effects on trade tax revenue.
Description
MPhil. Economics
Keywords
Trade, Tax, Revenue, Ghana