Navigating the Global Cashew Market: Determinants and Elasticities of Ghana's Exports

Subject Areas : Agricultural Economics

Benjamin Addo ¹ , Akwasi Mensah-Bonsu ²

1 - Department of Agricultural Economics and Agribusiness, University of Ghana, Legon, Ghana
2 - Department of Agricultural Economics and Agribusiness, University of Ghana, Legon, Ghana

Received: 2024-05-27 Accepted : 2024-08-31 Published : 2024-12-18

Keywords: ARDL model, Cashew nuts, Export, Ghana, Macroeconomic factors, Unit roots,

Abstract :

Given the reported changes in the volume of cashew nut exports in the global market, including shifts in consumer demand, competition among producers, and changes in trade policies, it is crucial to understand the determinants influencing export volume, particularly for an exporting country like Ghana. This study examined the determinants and the price and income elasticities of cashew nut exports from Ghana. Utilizing secondary data from relevant databases over a thirty-year period (1992-2021), the study employed the Autoregressive Distributed Lag (ARDL) model for analysis. The cointegration results confirmed a long-run relationship between the volume of cashew nuts exported and factors such as the real exchange rate, the real GDP per capita of major trading partners, the international price of cashew nuts, the international price of shea nuts, and Ghana's real GDP per capita. The error correction model indicated that any short-run disequilibrium was corrected at a speed of 91.39% in the long run. The ARDL regression results revealed that the volume of cashew nut exports experienced significant negative price effects due to both the international price of cashew nuts and the real exchange rate, while exhibiting positive income effects related to the real GDP per capita of trading partners and Ghana. The effects of these macroeconomic variables were found to be elastic in nature, suggesting that cashew nuts are considered a luxury food item. These findings have important implications for enhancing export trade for products from developing economies like Ghana's cashew nuts. Recommendations include implementing mechanisms to stabilize exchange rates, conducting regular market research to understand price sensitivities across target markets, and tailoring pricing strategies to diverse consumer preferences and purchasing power. Additionally, measures to stimulate and sustain economic growth are crucial for enhancing export trade.

References:

Abdul-Karim I, Damba OT (2024) Comparative analysis of asymmetric impact of cashew nuts and cocoa beans exports on Ghana’s economic growth: a non-linear ARDL approach. Cogent Economics & Finance. 12(1), 2295193. DOI: 10.1080/ 23322039. 2023.2295193.
Abokyi E, Folmer H, Asiedu KF (2018) Public buffer stocks as agricultural output price stabilization policy in Ghana. Agriculture & Food Security. 7(1), 1-12. DOI: 10.1186/s40066-018-0221-1.
Ahmad K, Qasim M, Chani MI (2017) Impact of Exchange rate on Exports in Case of Pakistan. Bulletin of Business and Economics. 6(2), 98-102.
Asratie TM, McMillan D (2021) Determinants of financial development in Ethiopia: ARDL approach. Cogent Economics & Finance. 9(1). DOI: 10.1080/23322039.2021.1963063.
Ayambila SN, Adam U, Tetteh AB (2023) The determinants of non-traditional agricultural exports’ growth in Ghana. Cogent Economics & Finance. 11(1). DOI: 10.1080/ 23322039.2023.2197322.
Babapour M, Seyed nourani SM, Ali AE (2021) Policy analysis the impact of GDP, the ratio of prices and exchange rate in neighboring countries on the development of agricultural exports. Technium Social Sciences Journal. 16, 261–273.
Bahmani M, Harvey H, Hegerty SW (2013) Empirical tests of the Marshall‐Lerner condition: a literature review. Journal of Economic Studies. 40(3), 411-443. https://doi.org/10. 1108/01443581311283989
Bekele WT, Mersha FG (2019) A dynamic panel gravity model application on the determinant factors of Ethiopia’s coffee export performance. Annals of Data Science. 6, 787 - 806. https://doi.org/10.1007/s40745-019-00198-4.
Boafo J, Lyons K (2021) Global demand for cashews is booming. How Ghana can take advantage to create jobs. The Conversation Newspaper. The Conversation Media Trust. https://theconversation.com/global-demand-for-cashews-is-booming-how-ghana-can-take-advantage-to-create-jobs-167405.
Boansi D, OdilonKounagbéLokonon B, Appah J (2014) Determinants of agricultural export trade: Case of fresh pineapple exports from Ghana. British Journal of Economics, Management & Trade. 4(11), 1736-1754. DOI: 10.9734/BJEMT/2014/10773.
Bostan I, Toderașcu C, Firtescu BN (2018) Exchange rate effects on international commercial trade competitiveness. Journal of Risk and Financial Management. 11(2), 19. https://doi.org/10.3390/jrfm11020019.
Cambazoğlu B, Güneş S (2016) Marshall-Lerner Condition Analysis: Turkey case. Economics, Management, and Financial Markets. 11(1), 272–283.
Chatrabnous N, Yazdani N, Vahdati K (2018) Determination of nutritional value and oxidative stability of fresh walnut. Journal of Nuts. 9(1), 11-20.
Chimhore M, Chivasa S (2021) The Effects of Exchange Rates on Zimbabwe’s Exports. Journal of Economics and Behavioral Studies. 13(4(J), 8-16. DOI: 10.22610/jebs. v13i4(J).3211.
Dalango D (2020) Determinants of Export Performance in Ethiopia (Time Series Analysis). European Journal of Business & Management. 12(28), 6-12. DOI: 10.7176/2jbm/12-28-02.
Danso-Abbeam G, Fosu S, Abiodun AO (2021) Technical and resource-use efficiencies of cashew production in Ghana: implication of achieving sustainable development goals. Scientific African. 14, DOI: 10.1016/j.sciaf. 2021.e01003.
Dastjerdi N T, Sedaghat R, Mohammadi H (2021) Investigating factors affecting pistachio exports in Iran during 2001-2019. Journal of Nuts. 12(1), 1–7. DOI: 10.22034/jon.2021.1915854.1096.
Esaku S (2021) The short and long-run relationship between trade openness and economic growth in Uganda. Cogent Economics & Finance. 9(1). DOI: 10.1080/ 23322039. 2021.1999060.
Eshetu F (2024) Determinants of Ethiopian sesame and coffee exports to its major trade partners: application of the gravity model. Cogent Social Sciences. 10(1), 2334114. https://doi.org/10.1080/23311886.2024.2334114
Gebremariam TK, Ying S (2022) The foreign direct investment-Export performance nexus: An ARDL based empirical evidence from Ethiopia Cogent Economics & Finance. 10(1). DOI: 10.1080/ 23322039. 2021.2009089.
GEPA (2019) Export Performance: Non-Traditional Exports (NTES) Sector General Performance 2018. Ghana Export Promotion Authority. www.gepaghana.org.
GEPA (2021) Export Performance: Non-Traditional Exports (NTES) sector general performance 2021. Ghana Export Promotion Authority. www.gepaghana.org.
Hassan MS, Kausar A, Arshed N (2022) Investigating Export Determinants: A Time Series Evidence from Canada. Sage Open. 12(2). https://doi.org/10.1177/21582440221101037
Hutchinson WK (2005) Linguistic distance as a determinant of bilateral trade. Southern Economic Journal. 72(1), 1–15. https://doi.org/10.2307/20062091
Javed I, Rehman A, Nabi I, Razzaq A, Saqib R, Bakhsh A, Mohibullah M, Luqman M (2020) Performance and macroeconomic determinants of basmati rice exports from Pakistan. Sarhad Journal of Agriculture. 36(2), 617–624. https://doi.org/ 10.17582/ journal.sja/2020/36.2.617.624
Johansen S, Juselius K (2009) Maximum likelihood estimation and inference on cointegration-with applications to the demand for money: Inference on cointegration. Oxford Bulletin of Economics and Statistics. 52(2), 169–210. DOI: 10.1111/j.1468-0084.1990. mp52002003.x.
Kripfganz S, Schneider DC (2023) ARDL: Estimating autoregressive distributed lag and equilibrium correction models. The Stata Journal. 23(4), 983-1019. DOI: 10.1177/1536867X231212434.
Kumar KNR, Naidu GM, Shafiwu AB (2024) Exploring the drivers of Indian agricultural exports: a dynamic panel data approach. Cogent Economics & Finance. 12(1), 2344733, DOI: 10.1080/ 23322039. 2024.2344733.
Latif NWA, Abdullah Z, Razdi MAM (2015) An autoregressive distributed lag (ARDL) analysis of the nexus between savings and investment in the three Asian economies. The Journal of Developing Areas. 49(3) 323-334. https://www.jstor. org/stable/ 24737323.
Lin FL, Wang MC (2020) Longevity and Economic Growth in China and India Using a Newly Developed Bootstrap ARDL Model. Frontiers in Public Health. 8(1), 291. DOI: 10.3389/fpubh.2020.00291.
Menegaki AN (2019) The ARDL method in the energy-growth nexus field; best implementation strategies. Economics. 7(4), 105. DOI: 10.3390/economics7040105.
Mold A, Prizzon A (2015) Commodity prices and export performance in sub-Saharan African countries. Handbook on Trade and Development. 232. DOI: 10.4337/ 9781781005316.00018.
MoTI (2012) Ghana-National export strategy for the non-traditional sector 2012-2016. Accra, Ghana.
Muthamia A, Muturi W (2015) Determinants of Earnings from Tea Export in Kenya: 1980-2011. Journal of World Economic Research. 4(1), 15-22. https://doi.org/10. 11648/j. jwer.20150401.12.
Mwansakilwa C, Tembo G, Mugisha J (2013) Growth and competitiveness of non-traditional agricultural exports in Zambia. Modern Economy. 4(11), 794-808. DOI: 10.4236/me.2013.411085.
Newman OB (2021) Export Promotion as a Development Strategy: Evidence from Selected Southeast Asian Countries and Lessons for Ghana. Journal for the Advancement of Developing Economies. 10(1), 15-36. DOI: 10.32873/ unl.dc.jade1012.
Nyeadi J, Atiga O, Atogenzoya C (2014) The Impact of Exchange Rate Movement on Export: Empirical Evidence from Ghana. International Journal of Academic Research in Accounting, Finance and Management Sciences. 4(3), 41-48. https://doi.org/ 10.6007/IJARAFMS/v4-i3/980 .
Okyere I, Jilu L (2020) The impact of export and import to economic growth of Ghana. European Journal of Business and Management. 12(21), 130-138. DOI: 10.7176/EJBM/12-12-15.
Pakrah S, Rahemi M, Nabipour A, Zahedzadeh F, Kakavand F, Vahdati K (2021) Sensory and nutritional attributes of Persian walnut kernel influenced by maturity stage, drying method, and cultivar. Journal of Food Processing and Preservation, e15513.
Pesaran MH, Shin Y, Smith R (2001) Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics. 16(3), 289–326. DOI: 10.1002/jae.616.
Sarikhani S, Vahdati K, Ligterink W (2021) Biochemical properties of superior persian walnut genotypes originated from southwest of Iran. International Journal of Horticultural Science and Technology. 8, 13-24.
Schumacher R (2020) Altering the pattern of trade in the wealth of nations: Adam Smith and the historiography of international trade theory. Journal of the History of Economics Thought. 42(1), 19-42. DOI: 10.1017/S51053837219000130.
Shane M, Roe T, Somwaru A (2008) Exchange Rates, Foreign Income, and U.S. Agricultural Exports. Agricultural and Resource Economics Review. 37(2), 160-175. DOI: 10.22004/ag.econ.45666.
Siaw A, Jiang Y, Pickson R, Dunya R (2018) Agricultural Exports and Economic Growth: A Disaggregated Analysis for Ghana. Theoretical Economics Letters. 8, 2251-2270. DOI: 10.4236/tel.[phone].
Stenberg K, Lauer JA, Gkountouras G, Fitzpatrick V, Stanciole A (2018) Econometric estimation of WHO-CHOICE country-specific costs for inpatient and outpatient health service delivery. Cost Effectiveness and Resource Allocation. 16, 1-15. https://doi.org/10.1186/s12962-018-0095-x.
Thuy VNT, Thuy DTT (2019) The impact of exchange rate volatility on exports in Vietnam: Abounds testing approach. Journal of Risk and Financial Management. 12(1), 6. https://www.mdpi.com/1911-8074/12/1 /6/htm https://doi.org/10.3390/jrfm12010006.
Topić-Pavković B, Kovačević S, Kurušić D (2023) The Impact of Innovative Financial and Banking Development on the Economic Growth of Bosnia and Herzegovina. Economics-Innovative and Economics Research Journal. 11(1), 251–267. https://doi.org/10.2478/eoik-2022-0022.
Vahdati K, Arab MM, Sarikhani S, Sadat Hosseini M, Leslie CA, Brown PJ (2019) Advances in Persian walnut (Juglans regia L.) breeding strategies. In: JM Al-Khayri, SM Jain and DV Johnson (eds.) Advances in plant breeding strategies, Vol 4. pp. 401-472. Nut and Beverage Crops. Springer, Switzerland.
Vahdati K, Sarikhani S, Arab MM, Leslie CA, Dandekar AM, Aletà N, Bielsa B, Gradziel TM, Montesinos Á, Rubio-Cabetas MJ, Sideli GM, Serdar Ü, Akyüz B, Beccaro GL, Donno D, Rovira M, Ferguson L, Akbari M, Sheikhi A, Sestras AF, Kafkas S, Paizila A,
Roozban MR, Kaur A, Panta S, Zhang L, Sestras RE, Mehlenbacher S (2021) Advances in rootstock breeding of nut trees: objectives and strategies. Plants 10 (11), 2234.
Wooldridge JM, Wadud M, Lye J (2016) Introductory econometrics. Asia Pacific edition with online study tools. Cengage AU.