Which macroeconomic factors influence agricultural production in Ghana

Abstract

This study identifies the macroeconomic factors which influence agricultural production in Ghana. The main purpose of the study is to find out the key macro factors that influence agricultural production in Ghana. The Cobb-Douglas production was employed and the Ordinary Least Squares estimation technique was used. Our dependent variable is agricultural output. The independent variables are labour force, inflation, real exchange rate and Real GDP per capita. We found that 1% increase in labour force caused agricultural production to decrease by 0.655946%. Also a 1% increase in inflation caused agricultural production to increase by 0.00459045%. In addition, a 1% increase in real exchange rate caused agricultural production to increase by 0.083949%. Finally, a 1% increase in real GDP per capita caused agricultural production to decrease by 1.05825%. Apart from inflation, labour force, real exchange rate and real GDP per capita were statistically significant. Therefore, the key macro economic factors that influence agricultural production in Ghana are labour force, real exchange rate and real GDP per capita. The agricultural sector should be made more attractive and conductive to ensure continuous production of food in Ghana.