Empirical Analysis of the Relationship between Industrial Performance and Macroeconomic Factors in Ghana
Frederick Mensah
Department of Economics, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana
Grace Ofori-Abebrese
Department of Economics, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana
Robert Becker Pickson *
Research and Consultancy Center, University of Professional Studies, Accra, Ghana
*Author to whom correspondence should be addressed.
Abstract
The conscious attempt to ascertain the wide range of macroeconomic factors that drive industrial production in Ghana necessitated this study. The main purpose of this study is to ascertain the impact that macroeconomic factors have on industrial performance in Ghana over the period 1980 to 2013. The Autoregressive Distributed Lag Model was employed to examine the long run and the short run dynamics of macroeconomic factors and industrial output. The study found cointegration relationship between industrial output and the macroeconomic factors. The results indicated that the major macroeconomic factors that affect industrial performance in Ghana are lending rate (+), inflation (+), employment (+) and government expenditure (+). Based on the findings, the study recommends that the government of Ghana should stabilize the macroeconomic environment of Ghana in order to achieve industrial growth and development.
Keywords: Industrial output, government expenditure, inflation, employment, lending rate