Navigating the Global Cashew Market: Determinants and Elasticities of Ghana's Exports
Benjamin Addo
1
(
Universsity of Ghana, Legon
)
Akwasi Mensah-Bonsu
2
(
Department of Agricultural Economics and Agribusiness, University of Ghana, Legon, Ghana
)
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.
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