Assessing Ghana’s bilateral exports potential and gap

Abstract

Nations continue to explore ways and means of increasing and optimising their export flows with other nations across the world. Eliminating supply-side constraints in the export industry is a way to maintain and promote international demand for a country’s exports. To achieve this goal, it is important for every country to be fully aware of its export potential and gaps as well as the inefficiencies that confront their exports. In this regard, the study employed the stochastic frontier gravity model to assess Ghana’s bilateral export potential and gap for a panel of 61 countries over the period 2000-2017. The objective of this study was to assess Ghana’s export potential and gap and explore the inefficiencies accounting for these gaps. The frontier results show that Ghana's bilateral exports are positively influenced by importer income level, the population of both trading partners and common colonial ties whiles geographic distance and landlocked reduce bilateral export flows. The study also found a huge export potential and gap among all trading partners selected for the study, but the export gap is greatest among the ECOWAS region of about USD 5.9 billion. The results also indicated that the ‘behind the border’ constraints such as poor infrastructure and tax burden are responsible for a considerable gap between Ghana’s potential and actual exports. The tax burden of both trading partners and poor infrastructure of Ghana increases technical inefficiency. It is, therefore, recommended that the government and policymakers increase investment in trade-related infrastructure and also negotiate effectively with trading partners to eliminate all forms of tariff and non-tariff barriers that impede the export potential of Ghana.