Comparison and implication of Korea’s GDP growth path for Ghana’s economic development

Abstract

This study sought to identify the factors that are accounting for growth on Korea’s and Ghana’s real GDP. This was enabled a comparison of the growth paths of the two economies and points of similarities and divergence were identified. The long-run and short-run relationship between real GDP and a number of independent variables were tested leading to the derivation of a short-run error correction model equation for Korea’s GDP growth. The model failed to establish long-run causality relationship between GDP and the variables. The Solow growth model formed the basis of the model specification. Tools used include Ordinary Least Square’s regression analysis, unit root test, Engle-Granger test for cointegration, the Johansen test and the Vector Autoregression Model (VAR). The study suggests that the two economies are on divergent growth paths Capital accumulation and inflation effects are significant in both economies. Estimates from the simulation exercise suggest that changes in Ghana’s GDP in the short-run to move between 5.7% and 9.2%.