Analysing The Major Effects Of Exports And Imports On The Balance Of Foreign Trade In Ghana

Abstract

This paper presents analysing the major effects of exports and imports on the balance of foreign trade in Ghana. The study made used of principal component analysis (PCA), multiple linear regression analysis and stepwise regression analysis to find out which export and import commodities have significant effects on the balance of foreign trade in Ghana. The sampling test conducted using the Mineigen criteria of 0.25 in absolute values. Data was sought from Ghana Statistical Service (GSS) trade statistics division. The data was divided into three groups, food, textile and manufacturing. The analysis shows that, the first group which is food, cocoa beans has significant effect on balance of trade on exports while rice has effect on imports. For the second group which is textile, kente also has significant effect on exports and boxes on imports for balance of trade in Ghana. The final group is manufacturing has monetary gold and aluminum sheet having effect on exports while that of buckets, shovels and gribs of machines  have effect on imports of balance of trade in Ghana. The gap between exports and imports with regard to food commodities is closing especially export while that of manufacturing commodities is increasing. In this paper the balance of trade considered goods only.

Key words: Principal Component (PCA), Stepwise Regression Analysis, Multiple Linear

Regressions Analysis, ANOVA