The driving forces of the service sector of the Ghanaian economy

Abstract

The service sector in Ghana over the years has seen a tremendous growth, displacing both the agricultural and industrial sectors. Thus it is fitting to examine what drives this growth in the service sector of Ghana and also determine which of the sub-sectors is more potent. To achieve this, two models were specified. The method of Ordinary Least Squares estimation technique was employed to determine the potency of the service sub-sectors (transport and communication, tourism, financial institutions, health and education) and also to determine the contributions and impact of some macroeconomic variables (labour force, capital, real gross domestic product, service export and service import) on service output in Ghana. The study findings that financial institutions are the sub-sector that drives service output in Ghana. Also labour force and real gross domestic product per capita were determined as the key macroeconomic variables that drive the service sector growth in Ghana. Based on this, the study recommends that more investment be made in such areas