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<p>The research analyzed the impact of cocoa, coffee, cashew, and cotton’s production, along with foreign direct investment, gross capital formation, real exchange rate, and trade openness on Ghana’s economic growth. The study used time-series data from the World Development Indicators and Food and Agricultural Organization Statistics Database from 1975 to 2024. The data were analyzed with a vector error-correction model. The results revealed that cocoa and cotton production harm Ghana’s long-term economic growth. Most of Ghana’s cocoa is exported as raw beans, with overseas chocolate processing, limiting domestic value addition, employment, and technology. Inadequate funding, limited credit, poor seeds, insufficient labor, low market prices, and outdated techniques affect cotton production. In addition, coffee and cashew production positively influence economic growth in the long term. Real exchange rate and trade openness negatively impact long-term growth, whereas foreign direct investment and gross capital formation have positive effects. Short-term, cocoa production negatively affects growth, coffee positively influences it, cotton negatively impacts growth, and trade openness positively affects growth. The error-correction term showed an adjustment speed coefficient of 0.0282, indicating convergence: A 1% deviation from equilibrium leads to a 2.82% adjustment toward long-term growth. Impulse response functions show Ghana’s agriculture sector maintains stable long-term connections with macroeconomic variables. Cocoa drives growth, cashew shows potential with foreign direct investment, while cotton and coffee exhibit vulnerabilities. The study recommends that government should promote diversification toward coffee and cashew production, while implementing productivity-enhancing and value-added interventions in the cocoa sector and reassessing cotton support policies. Such a strategy would strengthen the contribution of the cash-crop subsector to sustainable economic growth in Ghana.</p>

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Influence of cash crops on Ghana’s economic growth: evidence from vector error-correction model

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2026年8月1日

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  • John Atsu Agbolosoo,
  • Ernest Amegawovor Akey,
  • Collins Yeboah Asiedu

摘要

The research analyzed the impact of cocoa, coffee, cashew, and cotton’s production, along with foreign direct investment, gross capital formation, real exchange rate, and trade openness on Ghana’s economic growth. The study used time-series data from the World Development Indicators and Food and Agricultural Organization Statistics Database from 1975 to 2024. The data were analyzed with a vector error-correction model. The results revealed that cocoa and cotton production harm Ghana’s long-term economic growth. Most of Ghana’s cocoa is exported as raw beans, with overseas chocolate processing, limiting domestic value addition, employment, and technology. Inadequate funding, limited credit, poor seeds, insufficient labor, low market prices, and outdated techniques affect cotton production. In addition, coffee and cashew production positively influence economic growth in the long term. Real exchange rate and trade openness negatively impact long-term growth, whereas foreign direct investment and gross capital formation have positive effects. Short-term, cocoa production negatively affects growth, coffee positively influences it, cotton negatively impacts growth, and trade openness positively affects growth. The error-correction term showed an adjustment speed coefficient of 0.0282, indicating convergence: A 1% deviation from equilibrium leads to a 2.82% adjustment toward long-term growth. Impulse response functions show Ghana’s agriculture sector maintains stable long-term connections with macroeconomic variables. Cocoa drives growth, cashew shows potential with foreign direct investment, while cotton and coffee exhibit vulnerabilities. The study recommends that government should promote diversification toward coffee and cashew production, while implementing productivity-enhancing and value-added interventions in the cocoa sector and reassessing cotton support policies. Such a strategy would strengthen the contribution of the cash-crop subsector to sustainable economic growth in Ghana.