What Is The Weight Of Foreign Trade On Economic Outgrowth Of A Country Evidence in Ghana
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Abstract
This study empirically aims to investigate the weight of foreign trade on economic outgrowth for Ghana from 1960-2016. We use a panel fix effect model in estimating the weight these variables on the Real GDP. Real GDP in millions of US$ is used for proxy in economic outgrowth. Empirical investigations reveal that four of the variables are statistically significant at 5% and these variables are export, import, inflation rate and trade balance.
The coefficients of the variables used, export and gross domestic product at the current basic price, are positively related to the Real GDP, while other variables such as exchange rate, import, foreign direct investment, inflation, and trade balance have a negative weight on the Real GDP.
Outcome- Result of the analysis shows that there is a significant positive correlation between export and economic outgrowth. The result also shows the significant negative weight of trade balance on economic outgrowth. Thus, a unit change in trade balance will result in $823.813millions reduction in the real GDP of the country. The significant negative weight shows the relatively bigger share of import on the economy. Ghana should set tactics to improve exports and high Technical produced goods.
This study shows that a unit rise in export volume will lead to addition in the Real GDP. More, too, attention should be focused on exporting goods and improvement in trade structure which will, in turn, improve the efficiency in Ghana's production sector
Keywords
Economic Outgrowth, Weight of Foreign Trade
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