Assessing The Impact Of Export Processing Zones On Economic Growth In Ghana

ABSTRACT

The study sought to examine the impact of free zones exports and free zones investments on economic growth in Ghana. The quarterly time-series data used for this study covered the period 1998 to 2015. Having identified unit roots in our endogenous variables, the Johansen cointegration test was conducted and it came out clear that our three endogenous variables of GDP, free zones exports and free zones investments were cointegrated and this enabled us to use the vector error correction model to ascertain the impact of the free zones programme on economic growth in Ghana with trade openness being used as our control variable. Results based on the empirical work suggest that both free zones exports and free zones investments have significant negative relationship with our main dependent variable which is the GDP. Trade openness also has a significant negative relationship with economic growth but insignificant positive relationship with our two free zones variables. On the whole, based on the results of this study, it can be concluded that the free zones programme has not benefitted the country or it has not served its purpose of promoting national economic growth in Ghana. It is therefore suggested that since the free zones concept is actually universally recognised as a second best optimum not meant to be an everlasting policy for economic growth but only play an initiating role in the economic growth agenda, the Government of Ghana should scrap the programme and possibly look at opening up the whole country especially in terms of infrastructure and other incentive provision for all firms so that production or economic activity can freely take place in every corner of the country to realise balanced and more sustainable growth of the economy.