Macroeconomic Aspects of Ghana's Export Performance

This study examines the role of price competitiveness and foreign activity in Ghana’s export performance. Using an augmented VAR model in conjunction with modified Wald tests, causal relationships are tested between real effective exchange rates, foreign GDP and both total and agricultural export volumes. The results show that improvements in price competitiveness have been the principal driver of total export volumes. However, none of the traditional factors of export performance have had a significant effect on agricultural exports. In addition, using a VAR-MGARCH-in-mean model, we found that third-country exchange rates volatility have negatively affected Ghana’s export growth. These results confirm the effectiveness of Ghana’s market-oriented policies that started with the inception of the economic recovery program in 1983 but call for more policy efforts to offset the adverse impact of exchange rates volatility on the export sector.