Unemployment in Ghana: analyzing the asymmetric effects of export processing zones in dealing with the problem

Alexander Quaicoe
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Alexander Quaicoe: University of Ghana Business School, Legon

Theoretical and Applied Economics, 2025, vol. XXXII, issue 3(644), Autumn, 53-70

Abstract: Across the developing world, many countries are championing the establishment of export processing zones (EPZs) due to the perceived economic benefits associated with them. The reduction in the issue of unemployment is one main reason for the full embrace of the EPZ policy but as to whether this dream is being achieved is unclear. Relying on aggregated data for the period 1998Q1-2024Q4 from Ghana’s free zones, this study quantitatively analyses the impact of EPZs measured by their investment and export activities on the country’s unemployment rate by considering the issue of asymmetries through the use of the nonlinear autoregressive distributed lag technique. The empirical results point to the crucial role of the zones in Ghana in reducing unemployment in both the short and long-terms. Aside the selected variables being cointegrated, there is also the presence of long-run asymmetric effects of both EPZ investment and export on the unemployment rate. It is therefore suggested that government should streamline and enhance the EPZ subsidies to attract more firms that particularly engage in higher grade production to employ more people while helping them to acquire more skills.

Keywords: export processing zones; investment; export; unemployment; asymmetric effects; Ghana. (search for similar items in EconPapers)
Date: 2025
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