Determinants of the Share of the Economy Contributed by the Forestry Industry in Ghana from 1975 to 2023

Abstract

The macroeconomic determinants of the share of the economy contributed by the forestry industry in Ghana were examined over the period from 1975 to 2023, based on the development of time-series cointegration and error correction models. The analysis indicated that the share of the forestry industry was positively influenced by the real value of the cocoa industry, the exchange rate, and the real interest rate. The relationship between the forestry industry's share and per capita real gross domestic product (GDP) was found to be curvilinear: at low levels of per capita income, the share of the forestry industry in the economy increased with increasing income; beyond a certain level of per capita income, the share of the forestry industry declined. Additionally, economic shocks, namely the El Nino weather phenomenon, and political instability, related to the occurrence of military coups, were identified as negative influences on the share of the economy attributed to the forestry industry.