The reaction of growth to trade liberalization has varied considerably across countries, with most countries gaining, but others being adversely affected by trade liberalization. Therefore, this study sought to examine the relationship between trade liberalization and economic growth in Ghana. The study used annual time series data covering the period of 1970-2016. Using the autoregressive distributed lag (ARDL) model and Granger causality test, the study found that trade openness (proxied for trade liberalization), inflation, and population growth negatively affect the growth rate of the Ghanaian economy in the long-run, whilst the exchange rate has a significant and long-run positive effect on economic growth. Also, investment has no impact on economic growth in the long-run. The study further indicated that only inflation and population growth have significant impacts on economic growth in the short-run. The results of the Granger causality test showed that no complementary relationship between trade openness and economic growth exists in the short-run in Ghana.

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Keywords:
Trade liberalization,
real GDP,
investment,
exchange rate,
inflation,
population growth,
ARDL,
Ghana

JEL Classification:
O24, O40, E22, F31, E31, Q56, C32, N77

RSN_10(21)_09_Becker_Pickson

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