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American Journal of Economics and Business Administration
Original Research Paper
Role of Energy and Exports in Economic Growth in Ghana
Joseph Adu
Department of Banking and Finance, University of Professional Studies, Accra, Ghana
Article history
Received: 24-10-2018
Revised: 01-12-2018
Accepted: 01-02-2019
Email: kwakuadu84@yahoo.com
joseph.adu@upsa.edu.gh
Abstract: For many years, the quest for sustained economic growth has
remained a paramount agenda for developing and emerging economies.
However for many of these economies, this goal remains elusive as the
myriad of reforms implemented have often failed to yield desired results. The
literature is replete with many studies aimed at identifying the sources of
growth. Yet the role of energy access and utilization has received little
attention, likewise the role of exports. To fill this void and offer direction to
policy in emerging economies, this study attempts to investigate the impact of
energy use and exports in fostering economic growth and development using
Ghanaian data. Findings from this paper reveal that energy consumption and
exports are key drivers of economic growth in Ghana. Hence, development
policy in the country and beyond must be designed to give careful
consideration towards integrating energy policy and export-promotion in
order to harness the growth potentials of other sectors of the economy.
Keywords: Energy, Export, Economic Growth, Ghana
Introduction
The quest for economic growth has been pursued
rigorously by economies around the world since the
great depression. In the developing world, myriads of
pro-growth policies have been prescribed and
implemented but with varying impacts on economic
development of host countries. For instance,
development experts opine the structural adjustment and
economic liberalization policies prescribed by the
International Monetary Fund (IMF) and the World Bank
and implemented in Sub-Saharan African economies in
the 1980s-90s did not yield the needed impact of
spurring growth in the region (Cornia and Helleiner,
1994; Stewart, 1991; UNRISD, 1995; Killick, 1996).
In recent times however, development policy in
developing and emerging economies have been focused
on attracting foreign direct investment and boosting
exports. The success of these policies in generating the
needed growth depends to a large extent on the provision
of infrastructure particularly energy. Energy has evolved
over the years to become the bloodline of every economy
as it drives every sector and plays a key role in the
efficient function of the economy (Mensah, 2014). Thus
production, distribution and consumption of goods and
services in all sectors of the economy hinge on the
supply of reliable energy services (Mensah, 2014).
In recognition of the importance of energy services in
economic development, energy policy in Ghana has been
focused mainly on improving access to energy in both
urban and rural communities. Examples of such programs
include: The Rural Electrification Programme (REP),
National Electrification Scheme (NES), National LPG
Promotion Campaign initiated in 1972, 1989 and 1990
respectively. These policies have contributed immensely
towards expanding access and utilization of modern energy
sources like electricity and LPG among households and
industries. Nevertheless, the energy sector is still plagued
with challenges as evidenced by the perennial crises in the
sector especially with regards to electricity supply. At the
same time the export sector has been booming and
increasingly being diversified from traditional export
commodities like gold, cocoa, timber and diamonds to
include non-traditional exports like crafts, agricultural
produce (mango, pineapple, etc) and recently oil.
In recent past, the Ghanaian economy has been ranked
as among the fastest growing economies in the world,
with economic growth hitting a record high of 15% in
2011. Now, whereas several attempts have been made in
the literature to identify the sources of growth in the
Ghanaian economy, little is said of the role that energy
access and utilization as well as the export sector play in
the economic development of the country. Yet, the
literature on the energy-growth nexus emphasize the
importance of energy consumption in inducing economic
growth especially in developing and emerging economies,
with a quest for industrialization. Again, a careful look at
the sectoral shares of total exports in Ghana reveal