Does Non-farm Income Improve or Worsen Income Inequality? Evidence from Rural Ghana

This paper uses nationally representative household survey data of 2006 to examine the effect of non-farm income on income inequality in rural Ghana. Employing the Gini-decomposition technique, results indicate that aggregate non-farm income increased income inequality among rural households in Ghana. In terms of its components, while non-farm self-employment income reduced income inequality, non-farm wage income increased income inequality. A factor-decomposition of inequality revealed that education is the single most important variable contributing to the inequality-increasing nature of non-farm income. The effect of education on inequality is more pronounced for non-farm wage income. The policy implication is for a narrowing of education inequality among rural households in Ghana to create greater access to non-farm employment to reduce rural income inequality and poverty

Relative Producer Price, Cross Border Smuggling and Productivity in Ghana’s Cocoa Industry

Producer price differences between Ghana and its neighbours for an internationally traded commodity such as cocoa can be a recipe for smuggling. Against this background, price distortions can explain reported low productivity of cocoa in Ghana. This paper investigates the effect of price differences between Ghana on one hand and Cote d’Ivoire and Togo on the other hand on cocoa yields for Ghana using an autoregressive distributed lag (ARDL) cointegration model based on time series data spanning 1961 through 2017. We also estimates the volumes of cocoa smuggled from Ghana between 2000 and 2017. The study finds higher foreign producer price relative to Ghana reduces yields in cocoa in the short run, but improves on yields in the long run. Nationally an average of 40 kilograms per hectare of cocoa was lost to the country through smuggling between 1999/2000 and 2016/17. The study observes efforts has been made since 2001 to improve input support to the industry while enhancing price incentives to support productivity growth. Despite such interventions in the past two to three decades, illegal cross border trading appears to persists. Keywords: Producer price, Relative price, Smuggling, Productivity, Cocoa DOI: 10.7176/JESD/14-8-08 Publication date: April 30th 202

Distributional analysis of rural-urban household healthcare expenditure differentials in developing countries: evidence from Ghana

Equity in access to and use of healthcare resources is a global development agenda. Policy makers’ knowledge of the sources of differences in household healthcare spending is crucial for effective policy. This paper investigates the differences in the determinants of household healthcare expenditure across space and along selected quantiles of healthcare expenditure in Ghana. The determinants of rural-urban healthcare expenditure gap are also explored. Data was obtained from the sixth round of the Ghana Living Standards Survey (GLSS 6) conducted in 2013. An unconditional quantile regression (UQR) and a decomposition technique based on UQR, adjusted for sample selection bias, were applied. Findings indicate that differences in the determinants of household healthcare expenditure across space and along quantiles are driven by individual-level variables. Besides, the rural-urban health expenditure gap is greatest among households in the lower quantiles and this gap is largely driven by differences in household income per capita and percentage of household members enrolled on health insurance policies. To reduce rural-urban healthcare expenditure inequality, targeted policies should be prioritised in addition to efforts to narrow rural-urban differences in household per capita income and enrolment in health insurance policies

The twin deficits hypothesis: Evidence from Ghana

Purpose – This paper investigates the twin deficit hypothesis for Ghana in view of the persistent co-movement between the budget deficit (BD) and current account deficit (CAD) over the past three decades. Design/methodology/approach – The paper uses annual data for the period 1980-2014 and ascertains whether there is long-run association between the budget and current account deficits using the Johansen Cointegration test. The Error Correction Model is estimated to check stability of the long-run association between the two deficits. A Granger causality test is performed to determine the direction of causality between the two variables. Findings – The results confirm the existence of long-run equilibrium relationship between the budget and current account balances. The error correction model finds an insignificant effect of the BD on the CAD both in the short and long runs. The ECM result was however significant for both the long run and short run regarding the effect of CAD on BD even as the adjustment parameter suggests that 33 percent of the disequilibrium in budget balance in the previous period is corrected in the current period. Granger causality results find support for the reverse causality argument, thereby rejecting the twin-deficits hypothesis for Ghana. Research limitations/implications – For lack of consistent data variables such as exchange rate and interest rate were not included in the study. Originality/value – The findings lend support to the reverse causality argument that says that causality runs from the current account deficit to the budget deficit

The Effect of External Debt on Economic Growth in Sub-Saharan Africa

Purpose: This paper examines the effect of external debt on economic growth in Sub-Saharan Africa (SSA) in view of an upsurge in the level of external debt in many countries on the continent. Design/methodology/approach: The paper uses annual data for 39 SSA countries from 1990 to 2013 and employs the System Generalised Methods of Moments (GMM) estimation technique. Findings: The paper finds that external debt negatively affects economic growth in SSA. Categorization of countries based on per capita income however does not affect the external debt-growth nexus, neither does there exist a non-linear relationship between external debt and economic growth. Research limitations/implications: The finding of a negative relationship between external debt and growth does not necessarily imply that SSA countries should cut back on foreign borrowing in other to boost growth. Rather, given the huge savings gaps in some of the countries, what governments in SSA must do is to ensure that the foreign loans are invested in projects that would eventually generate enough returns to amortize the debt. Originality/value: Not only does the present paper extend to more recent data but we also apply one of the frontier econometric techniques - the system GMM approach - to unravel the external debt-economic growth dynamics in SSA

The Impact of Nonfarm Activities on Rural Farm Household Income and Food Security in the Upper East and Upper West Regions of Ghana

Abstract Research shows that participation in rural non-farm activities exerts a pronounced impact on agriculture, household farm decisions, rural development, income and welfare as well as household food security. This paper investigates the impact of participation in non-farm activities on household income and food security among farm households in the Upper East and Upper West Regions of Ghana. Using the Recommended Daily Calorie Required (RDCR) approach, the study finds that 45 percent of households in the two regions are food insecure. Propensity score matching (PSM) results indicate that participation in non-farm work has significant positive effect on household income and food security status. The policy implications of the findings are discussed

Urban Farm-Nonfarm Diversification, Household Income and Food Expenditure in Ghana

This paper investigates the impact of farm-nonfarm diversification (FND) on household income and food expenditure in urban Ghana using propensity score matching (PSM) technique to account for potential selection bias. We find diversified households to be statistically different from undiversified households in terms of household characteristics. Age, gender, educational attainment of the household head, household size, ownership of livestock and agricultural land, and receipt of miscellaneous and rent incomes are positive and significant determinants of FND in urban Ghana. In addition, we find that participation in both farm and nonfarm activities positively and significantly impacts household income and food expenditure. In the light of growing urbanization, with its implications for unemployment, poverty and food insecurity, we recommend diversification among urban households as a means of smoothing income and consumption