THE RELATIONSHIP BETWEEN DOMESTIC AGRICULTURAL INVESTMENTS AND ECONOMIC GROWTH IN GHANA

We investigated the contribution to economic growth emerging from Ghana’s investment into domestic agriculture. To this effect, time series data spanning 1965 to 2020 was used. For data analysis, stationarity was achieved using Augmented Dicky-Fuller and Phillips-Perron test; the ARDL bounds approach adopted for cointegration; finally, the Error Correction Model and Granger causality test were used for determining the long-run and short-run causal effects. From the results, in both long-run and short-run, the nation’s domestic agricultural investment was not a positive contributor to economic growth. Positive contribution to economic growth was from investment in other sectors (industrial and service sectors) and trade openness index. Moreover, government expenditure index contributed negatively to economic growth. In the short-run, unidirectional causality was from economic growth to government expenditure index, other sector investments to economic growth, and economic growth to trade openness index. In this study, we strongly advocate for considerable government domestic investment into the agricultural sector besides other sector investments, and further relaxing trade policies since it is the only surety to achieving the government’s two-fold agenda of zero tolerance for hunger and poverty while simultaneously increasing agriculture’s contribution to economic growth with partial dependence on donor funds.