The Impact of Trade Liberalization on Poverty in Ghana

Studies have shown that free trade is better than no trade and therefore trade liberalization will significantly improve export earnings and enhance economic growth. Many countries especially those of South-East Asia have attained significant growth rates which are partly attributed to their trade policies. Evidence from countries such as India and China also show that economic growth has led to significant declines in poverty levels. Many African countries including Ghana have liberalized their trade regimes by reducing trade barriers and encouraged export processing companies. Although trade liberalization has benefited some countries, the same cannot be said of many African countries, including Ghana; a situation attributed to the fact that trade reform tends to generate both winners and losers. Hence, the impact of trade-led growth on poverty reduction may not necessarily be unambiguous. The lack of general consensus on the influence of growth on poverty level in Ghana has prompted the following question: To what extent has trade liberalization affected economic growth in Ghana? Using CGE modelling technique, the study investigates the trade-growth nexus and its implications for poverty reduction in Ghana.