Is Ghana Catching up with Her Colonial Master? A Time Series Analysis into Speed of Convergence Between Ghana and UK

Abstract

This work set out to undertake a study into time series speed of convergence between two ‘worlds’. That is the developing and the developed ‘world’. The study used data on Ghana to represent developing countries and the United Kingdom data to represent developed countries. The study also calculated the number of years Ghana would need to catch-up with UK in terms of growth. The period used in the study was from 1958-2011. The work found evidence in favour of convergence between the two countries using time series technique. However, when the study tested the series from 1958 to 1970 (where this period also included a policy of import-substitution industrialization) there was evidence of convergence. In calculating the speed of convergence that is the number of years both countries would converge, then Ghana would catch-up in 183 years. However, a growth catch up simulation suggests that Ghana will converge with the UK in 22 years with a growth rate of 11%, and with a rate of 5% Ghana would catch up in 72 years and UK growing at a rate of 2.4%. The study therefore recommends industrialization as the main driving force for faster catch-up.

Keywords: Convergence, Speed of Convergence, Economic Growth, Time Series Analysis