IDEAS home Printed from https://ideas.repec.org/a/eee/riibaf/v42y2017icp1150-1163.html
   My bibliography  Save this article

Assessing the impact of export processing zones on economic growth in Ghana

Author

Listed:
  • Quaicoe, Alexander
  • Aboagye, Anthony Q.Q.
  • Bokpin, Godfred A.

Abstract

The study examines the impact of free zones exports and investments on economic growth in Ghana. A vector error correction model (VECM) was employed to ascertain the impact of the Free Zones Programme on economic growth in Ghana on a quarterly time series data spanning 1998–2015. The results show that both free zones exports and free zones investments have significant negative relationship with economic growth. Trade openness also has a significant negative relationship with economic growth but insignificant positive relationship with investment and export. The study concludes that the Free Zones Programme has not served its purpose of promoting economic growth in Ghana. It is universally known that the concept of free zones is actually a second best option and as such is not meant be a lasting policy for promoting economic growth. For this reason, given the negative effect the programme has had on economic growth, the Government of Ghana should scrap it and possibly look at opening up the whole country, especially in terms of infrastructure and other incentives for all firms, so that economic activity can freely take place in every corner of the country to realise balanced and more sustainable growth of the economy.

Suggested Citation

  • Quaicoe, Alexander & Aboagye, Anthony Q.Q. & Bokpin, Godfred A., 2017. "Assessing the impact of export processing zones on economic growth in Ghana," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1150-1163.
    • Handle: RePEc:eee:riibaf:v:42:y:2017:i:c:p:1150-1163
    DOI: 10.1016/j.ribaf.2017.07.052
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0275531916303609
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ribaf.2017.07.052?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Judith Giles & Cara Williams, 2001. "Export-led growth: a survey of the empirical literature and some non-causality results. Part 2," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 9(4), pages 445-470.
    2. Michael Engman & Osamu Onodera & Enrico Pinali, 2007. "Export Processing Zones: Past and Future Role in Trade and Development," OECD Trade Policy Papers 53, OECD Publishing.
    3. Ganeshan Wignaraja, 2002. "Firm Size, Technological Capabilities and Market-oriented Policies in Mauritius," Oxford Development Studies, Taylor & Francis Journals, vol. 30(1), pages 87-104.
    4. Christian Dreger & Dierk Herzer, 2013. "A further examination of the export-led growth hypothesis," Empirical Economics, Springer, vol. 45(1), pages 39-60, August.
    5. B Ouattara, 2004. "Modelling the Long Run Determinants of Private Investment in Senegal," Economics Discussion Paper Series 0413, Economics, The University of Manchester.
    6. repec:ilo:ilowps:378376 is not listed on IDEAS
    7. Balassa, Bela, 1978. "Exports and economic growth : Further evidence," Journal of Development Economics, Elsevier, vol. 5(2), pages 181-189, June.
    8. repec:ilo:ilowps:398959 is not listed on IDEAS
    9. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    10. O'Rourke, Kevin H, 2000. "Tariffs and Growth in the Late 19th Century," Economic Journal, Royal Economic Society, vol. 110(463), pages 456-483, April.
    11. Aradhna Aggarwal, 2005. "Performance of export processing zones: a comparative analysis of India, Sri Lanka and Bangladesh," Indian Council for Research on International Economic Relations, New Delhi Working Papers 155, Indian Council for Research on International Economic Relations, New Delhi, India.
    12. Enrique Blanco de Armas & Mustapha Sadni Jallab, 2002. "A Review of the Role and Impact of Export Processing Zones in World Trade : the Case of Mexico," Post-Print halshs-00178444, HAL.
    13. P. K. Mishra, 2011. "The Dynamics of Relationship between exports and economic growth in India," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 4(2), pages 53-70, August.
    14. Wang, Jin, 2013. "The economic impact of Special Economic Zones: Evidence from Chinese municipalities," Journal of Development Economics, Elsevier, vol. 101(C), pages 133-147.
    15. Singa Boyenge, Jean-Pierre., 2007. "ILO database on export processing zones (Revised)," ILO Working Papers 993989593402676, International Labour Organization.
    16. Anne O. Krueger, 1978. "Foreign Trade Regimes and Economic Development: Liberalization Attempts and Consequences," NBER Books, National Bureau of Economic Research, Inc, number krue78-1, March.
    17. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    18. Judith Giles & Cara Williams, 2001. "Export-led growth: a survey of the empirical literature and some non-causality results. Part 1," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 9(3), pages 261-337.
    19. Romain Wacziarg & Karen Horn Welch, 2008. "Trade Liberalization and Growth: New Evidence," The World Bank Economic Review, World Bank, vol. 22(2), pages 187-231, June.
    20. Ram, Rati, 1987. "Exports and Economic Growth in Developing Countries: Evidence from Time-Series and Cross-Section Data," Economic Development and Cultural Change, University of Chicago Press, vol. 36(1), pages 51-72, October.
    21. Sargent, John & Matthews, Linda, 2009. "China versus Mexico in the Global EPZ Industry: Maquiladoras, FDI Quality, and Plant Mortality," World Development, Elsevier, vol. 37(6), pages 1069-1082, June.
    22. Mohammad Afzal & Ijaz Hussain, 2010. "Export-Led Growth Hypothesis: Evidence from Pakistan," Journal of Quantitative Economics, The Indian Econometric Society, vol. 8(1), pages 130-147, January.
    23. Fumitaka Furuoka & Qaiser Munir, 2010. "Does export dependency hurt economic development? Empirical evidence from Singapore," Economics Bulletin, AccessEcon, vol. 30(1), pages 204-218.
    24. Kavoussi, Rostam M., 1984. "Export expansion and economic growth : Further empirical evidence," Journal of Development Economics, Elsevier, vol. 14(1), pages 241-250.
    25. Helena Johansson, 1994. "The Economics of Export Processing Zones Revisited," Development Policy Review, Overseas Development Institute, vol. 12(4), pages 387-402, December.
    26. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    27. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
    28. Jacint Balaguer & Manuel Cantavella-Jorda, 2004. "Structural change in exports and economic growth: cointegration and causality analysis for Spain (1961-2000)," Applied Economics, Taylor & Francis Journals, vol. 36(5), pages 473-477.
    29. Jenkins, Mauricio., 2005. "Economic and social effects of export processing zones in Costa Rica," ILO Working Papers 993783763402676, International Labour Organization.
    30. Cling, Jean-Pierre & Razafindrakoto, Mireille & Roubaud, Francois, 2005. "Export processing zones in Madagascar: a success story under threat?," World Development, Elsevier, vol. 33(5), pages 785-803, May.
    31. Hamada, Koichi, 1974. "An economic analysis of the duty-free zone," Journal of International Economics, Elsevier, vol. 4(3), pages 225-241, August.
    32. Devereux, John & Chen, Lein Lein, 1995. "Export Zones and Welfare: Another Look," Oxford Economic Papers, Oxford University Press, vol. 47(4), pages 704-713, October.
    33. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
    34. Johansson, Helena & Nilsson, Lars, 1997. "Export processing zones as catalysts," World Development, Elsevier, vol. 25(12), pages 2115-2128, December.
    35. William Milberg, 2007. "WP 2007-10 Exporting Processing Zones, Industrial Upgrading and Economic Development: A Survey," SCEPA working paper series. 2007-10, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    36. Kankesu Jayanthakumaran, 2003. "Benefit-Cost Appraisals of Export Processing Zones: A Survey of the Literature," Development Policy Review, Overseas Development Institute, vol. 21(1), pages 51-65, January.
    37. Gibbon, Peter, 2003. "The African Growth and Opportunity Act and the Global Commodity Chain for Clothing," World Development, Elsevier, vol. 31(11), pages 1809-1827, November.
    38. Edward M. Graham, 2004. "Do export processing zones attract FDI and its benefits," International Economics and Economic Policy, Springer, vol. 1(1), pages 87-103, March.
    39. Bolaky, Bineswaree & Freund, Caroline, 2004. "Trade, regulations, and growth," Policy Research Working Paper Series 3255, The World Bank.
    40. repec:ebl:ecbull:v:30:y:2010:i:1:p:204-218 is not listed on IDEAS
    41. Durham, J.B.J. Benson, 2004. "Absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth," European Economic Review, Elsevier, vol. 48(2), pages 285-306, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Claudia Nyarko Mensah & Lamini Dauda & Kofi Baah Boamah & Muhammad Salman, 2021. "One district one factory policy of Ghana, a transition to a low-carbon habitable economy?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(1), pages 703-721, January.
    2. Elda MARZAI (ABLIZ), 2018. "Bancassurance – one of the most important distribution channels in Europe," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 49-60.
    3. Hilmar Þór HILMARSSON, 2018. "Iceland and its participation in European economic integration: advantages and disadvantages of European Union and Euro Area membership," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 15-30.
    4. Rinku JAIN & Kirti AREKAR & Aayesha TAHERAH, 2018. "Impact of the Volatility of Indian oil prices on sectoral returns in Indian Equity Markets," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 147-162.
    5. Adeel Saleem & Maqbool H. Sial & Ahmed Raza Cheema, 2023. "Does an asymmetric nexus exist between exports and economic growth in Pakistan? Recent evidence from a nonlinear ARDL approach," Economic Change and Restructuring, Springer, vol. 56(1), pages 297-326, February.
    6. Stephen Ebhodaghe Ughulu, 2021. "Industrial Output and Economic Growth in Emerging Economies: Evidence from Nigeria," Applied Finance and Accounting, Redfame publishing, vol. 7(1), pages 32-43, February.
    7. Jelena TOSKOVIC & Jovana KISIN, 2018. "Review of effects of economic reforms on economic development of the countries in transition," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 7-14.
    8. Aurora Elena DINA (MANOLACHE), 2018. "Comparative Assessment of Risk-Based Capital, Solvency II and Swiss Solvency Test," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 61-72.
    9. Andrei Stănculescu, 2018. "A new approach to corporate governance," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 45-48.
    10. Chiricu Cosmina-Ștefania, 2018. "The economic impact of indirect taxes on economic growth in European context," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 113-120.
    11. Ana-Maria URÎȚESCU, 2018. "Evolution of the main macroeconomic indicators as a result of Romania's integration into the EU," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 163-174.
    12. George PASMANGIU, 2018. "The role of fiscal policies in maintaining macroeconomic stability. A DSGE model approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 31-44.
    13. Ionuț JIANU, 2018. "The impact of government health and education expenditure on income inequality in European Union," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 121-134.
    14. Ernest Kay Bakpa & Hu Xuhua & Abigail Konadu Aboagye, 2021. "Ghana’s economic growth: Directing our focus on the contributing influences of innovation activities and trade," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2213-2237, December.
    15. Cristina Irina PARASCHIV, 2018. "How do unemployment benefits and minimum wage affect poverty?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 91-112.
    16. Sandina Maria JELOAICA, 2018. "Determinants of fiscal discipline in Romania – the IMF and the EU," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 135-146.
    17. Cosmin SERBANESCU & Adrian VINTILESCU & Lacramioara CORCHES, 2018. "Redesigning Optimal Mechanisms in Social Assistance," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 73-90.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adeel Saleem & Maqbool H. Sial & Ahmed Raza Cheema, 2023. "Does an asymmetric nexus exist between exports and economic growth in Pakistan? Recent evidence from a nonlinear ARDL approach," Economic Change and Restructuring, Springer, vol. 56(1), pages 297-326, February.
    2. Christian Dreger & Dierk Herzer, 2013. "A further examination of the export-led growth hypothesis," Empirical Economics, Springer, vol. 45(1), pages 39-60, August.
    3. Joshua J. Lewer & Hendrik Van den Berg, 2003. "How Large Is International Trade’s Effect on Economic Growth?," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 363-396, July.
    4. László Kónya & Jai Pal Singh, 2006. "Exports, Imports and Economic Growth in India," Working Papers 2006.06, School of Economics, La Trobe University.
    5. Muhammad Shahbaz & Pervaz Azim & Khalil Ahmad, 2011. "Exports-Led Growth Hypothesis in Pakistan: Further Evidence," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 182-197.
    6. Onafowora, Olugbenga A. & Owoye, Oluwole, 1998. "Can Trade Liberalization Stimulate Economic Growth in Africa?," World Development, Elsevier, vol. 26(3), pages 497-506, March.
    7. Nasim Shah Shirazi & Turkhan Ali Abdul Manap, 2005. "Export-Led Growth Hypothesis: Further Econometric Evidence From South Asia," The Developing Economies, Institute of Developing Economies, vol. 43(4), pages 472-488, December.
    8. Ahdi N. Ajmi & Goodness C. Aye & Mehmet Balcilar & Rangan Gupta, 2015. "Causality between exports and economic growth in South Africa: evidence from linear and nonlinear tests," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(2), pages 163-181, April-Jun.
    9. Subrata Ghatak & Chris Milner & Utku Utkulu, 1997. "Exports, export composition and growth : cointegration and causality evidence for Malaysia," Applied Economics, Taylor & Francis Journals, vol. 29(2), pages 213-223.
    10. Fakhri J. Hasanov & Muhammad Javid & Frederick L. Joutz, 2022. "Saudi Non-Oil Exports before and after COVID-19: Historical Impacts of Determinants and Scenario Analysis," Sustainability, MDPI, vol. 14(4), pages 1-38, February.
    11. Khalid Mahmood & Shehla Munir, 2018. "Agricultural exports and economic growth in Pakistan: an econometric reassessment," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(4), pages 1561-1574, July.
    12. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    13. Maryam Almasifard & Sasan Torabzadeh Khorasani, 2017. "Relationship Between Domestic Production in Agricultural and Industrial Sectors and Purchasing Power by Controlling for International Trade Variables (Iran)," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 244-253.
    14. Rahman, Mohammad Mafizur & Mamun, Shamsul Arifeen Khan, 2016. "Energy use, international trade and economic growth nexus in Australia: New evidence from an extended growth model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 806-816.
    15. Utku Utkulu & Durmus Özdemir, 2005. "Does Trade Liberalization Cause a Long Run Economic Growth in Turkey," Economic Change and Restructuring, Springer, vol. 37(3), pages 245-266, September.
    16. Thian-Hee Yiew & Chin-Yu Lee & Lin-Sea Lau, 2021. "Economic growth in selected G20 countries: How do different pollution emissions matter?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(8), pages 11451-11474, August.
    17. Hakimi, Abdelaziz & Hamdi, Helmi, 2016. "Trade liberalization, FDI inflows, environmental quality and economic growth: A comparative analysis between Tunisia and Morocco," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1445-1456.
    18. Abo-Zaid Salem M, 2011. "The Trade-Growth Relationship in Israel Revisited: Evidence from Annual Data, 1960-2004," Review of Middle East Economics and Finance, De Gruyter, vol. 6(3), pages 63-93, February.
    19. Bakari, Sayef, 2017. "Why is South Africa Still a Developing Country?," MPRA Paper 80763, University Library of Munich, Germany.
    20. Abhijit Sharma & Theodore Panagiotidis, 2003. "An Analysis of Exports and Growth in India: Some Empirical Evidence (1971-2001)," Working Papers 2003004, The University of Sheffield, Department of Economics, revised Nov 2003.

    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:eee:riibaf:v:42:y:2017:i:c:p:1150-1163. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ribaf .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.