The role of aid for trade facilitation in Ghana’s export diversification agenda

Abstract

This study employs the novel dynamic Autoregressive Distributed Lag simulation alongside the traditional Autoregressive Distributed Lag model to investigate the extent to which aid for trade facilitation contributes to improvement in export diversification in a single case country using quarterly data from 2005 to 2020. The estimation results from the augmented Heckscher–Ohlin model adopted for the  study indicate that aid for trade facilitation so far received by Ghana has been a significant resource for enhancing export diversification  either measured as the number of exported commodities, number of trading partners or the Hirschman–Herfindahl Index (HHI). Based  on these findings, the study concludes that Aid for Trade (AfT) facilitation is a potential policy option that the government of Ghana can  employ to promote export diversification. Consequently, the study encourages the donor community and the Ghanaian government to  allocate new and additional resources specifically aimed at reducing trade-related transaction costs since this could improve the  diversification of exports in the country. Additionally, the study suggests that the Ghana Export Promotion Authority and the Ghana Free  Zones Authority should provide targeted support in the areas of customs procedures, simplified documentation, and efficient logistics to  industries with export potential. Facilitating trade procedures is recommended as a strategy to further diversify exports in the country.