IDEAS home Printed from https://ideas.repec.org/a/afj/journl/v14y2012i1p37-66.html
   My bibliography  Save this article

The Balance of Payments Constraint Growth Model and the Effect of Trade Liberalization on the Trade Balance and Income Growth in Ghana

Author

Listed:
  • Alexander Bilson Darku

    () (University of Lethbridge)

Abstract

This paper uses the balance of payment constraint (BPC) growth model and the autoregressive distributed lag approach to cointegration to examine the major determinants of income growth in Ghana, emphasizing the importance of exports, capital inflows and relative prices. The paper also uses the model to identify the effect of trade liberalization on the trade balance and income growth in Ghana. The main empirical results suggest that increases in the growth rates of exports, capital inflows and relative prices lead to an increase in growth of income. However, the liberalization of the external sector has not improved the income growth performance in Ghana. The results from this study questions the idea that trade liberalization leads to improvement in economic welfare of countries by raising the sustainable growth rate.

Suggested Citation

  • Alexander Bilson Darku, 2012. "The Balance of Payments Constraint Growth Model and the Effect of Trade Liberalization on the Trade Balance and Income Growth in Ghana," The African Finance Journal, Africagrowth Institute, vol. 14(1), pages 37-66.
  • Handle: RePEc:afj:journl:v:14:y:2012:i:1:p:37-66
    as

    Download full text from publisher

    File URL: http://www.journals.co.za/ej/ejour_finj.html
    Download Restriction: no

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:afj:journl:v:14:y:2012:i:1:p:37-66. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kirk De Doncker). General contact details of provider: http://edirc.repec.org/data/afrgrza.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.