The relationship between external debt and agriculture GDP growth in Ghana: an ARDL cointegrating bound testing approach

Figures & data

Figure 1. Trend of government expenditure on agriculture percentage of GDP (2003–2018). Source: Authors’ computation based on World Bank Data, 2020.

Figure 2. Trend of agricultural valued added percentage of GDP (2003–2018). Source: Authors’ computation based on World Bank Data, 2020.

Figure 3. Conceptual framework. Source: Authors Estimations, 2023.

Table 1. Variables, measurement, source and expected sign.

Variables	Measurement	Sources	Expected sign	Link to the source of data
AG	Agriculture value added (% of GDP)	World Development Indicators (WDI)	N/A	https://databank.worldbank.org/
ED	Total external debt stock (% of GDP)	WDI	+	https://databank.worldbank.org/
SD	Debt servicing (% of GDP)	WDI	–	https://databank.worldbank.org/
EMPLA	Employment in the agricultural sector (% of the total population)	WDI	+	https://databank.worldbank.org/
GEA	Government expenditure on agricultural (% of GDP)	ReSAKSS	+	https://www.resakss.org/
CRA	Credit to the agricultural sector (% of GDP)	Ghana Statistical Service/ MofA	+	https://statsghana.gov.gh
EX	total annual agricultural export (% of GDP)	WDI	+	https://databank.worldbank.org/

Source: Authors Estimations, 2023.

Table 2. Descriptive statistics.

	AGD	ED	SD	EMPLA	GEA	CRA	EX
Mean	37.55086	60.66121	4.388499	51.89550	3.453820	5.056285	9.089298
Median	36.73814	50.19574	3.645395	55.14600	3.103020	4.145000	8.595509
Maximum	59.96740	139.4387	10.76960	56.97800	12.20557	16.80000	21.08294
Minimum	18.27153	16.58442	0.813269	33.50400	0.512565	0.400000	2.140000
Std. Dev.	12.04378	33.68650	2.715401	7.632949	2.887045	3.243660	4.833624
Skewness	0.135797	0.666113	0.519444	−1.575991	1.753915	1.819041	0.309200
Kurtosis	2.121866	2.447617	2.319258	3.971739	5.834674	6.564953	2.231954
Jarque-Bera	1.408138	3.466590	2.571161	18.13212	33.90042	43.24088	1.620522
Probability	0.494569	0.176701	0.276490	0.000116	0.000000	0.000000	0.444742

Source: Authors Estimations, 2023.

Table 3. Unit root test at level.

		ADF			PP
Variables	Lags	T-Statis	p-Value		T-Statis	p-Value	Lag length
AG	1	3.33	0.032	1 (1)	3.75	0.041	1 (1)
ED	1	1.66	0.263	1 (1)	2.19	0.280	1 (1)
SD	1	2.96	0.090	1 (0)	2.90	0.080	1 (0)
EMPLA	1	2.95	0.092	1 (0)	2.99	0.081	1 (0)
GEA	2	1.70	0.426	1 (1)	1.77	0.487	1 (1)
CRA	1	1.50	0.532	1 (1)	1.798	0.0.39	1 (1)
EX	1	1.82	0.379	1 (1)	1.98	0.371	1 (1)

Source: Authors Estimations, 2023.

Table 4. Unit root test at first difference.

		ADF			PP		Lags
Variables	Lags	T-statis	p-Value		T-statis	p-Value
AG	1	6.10	0.000	1 (1)	4.19	0.001	1 (1)
ED	1	3.98	0.000	1 (1)	3.20	0.020	1 (1)
SD	1	4.90	0.000	1 (0)	6.19	0.000	1 (0)
EMPLA	1	4.01	0.000	1 (0)	3.60	0.008	1 (0)
GEA	2	3.98	0.010	1 (1)	3.75	0.002	1 (1)
CRA	1	2.94	0.039	1 (1)	3.14	0.011	1 (1)
EX	1	3.09	0.004	1 (1)	4.10	0.000	1 (1)

Source: Authors define, 2023.

Table 5. Lag length criteria.

No of lags	AIC	BIC	LM (serial correlation)
1	3.367	4.231	6.11 (0.0023)
2	1.493	1.893	2.01 (0.535)
3	5.943	5.231	8.39 (0.0002)
4	6.012	6.124	10.96 (0.000)

Source: Authors Estimations, 2023.

Table 6. Cointegration test.

Model	F-statistics	(k)	90%		95%		99%
			1 (0)	1 (1)	1 (0)	1 (1)	1 (0)	1 (1)
AG	14.11	6	2.10	4.01	2.18	3.90	2.90	5.20

(K) is the number of predictors.

Source: Authors Estimations, 2023.

Table 7. Long run error correction model estimate.

Variables	Coefficients	Std. error	t-Statistics	p-Value
ED	4.26	0.10	42.6	0.000
SD	3.25	1.21	2.69	0.000
EMPLA	−2.45	2.15	−1.14	0.132
GEA	3.25	1.22	2.66	0.001
CRA	2.63	0.12	21.92	0.000
EX	2.31	1.51	1.59	0.217

Source: Authors Estimations, 2023.

Table 8. Short run error correction model estimate.

Variables	Coefficients	Std. error	t-Statistics	p-Value
ECM	−0.26	0.08	3.25	0.011
DAG	5.21	2.22	2.34	0.010
DED	3.01	1.74	1.73	0.133
DSD	1.70	0.61	2.79	0.000
DEMPLA	3.21	1.76	1.83	0.041
DGEA	2.13	1.50	1.42	0.122
DGEA-1	1.73	2.13	0.81	0.331
DCRA	−3.22	0.15	−21.47	0.000
DEX	1.20	0.80	1.50	0.116
R-squared	0.80
Adjusted R-squared	0.76
DW-statistics	1.95
F-statistics	21.32
Prob (F-statistics)	0.00
Arch effect	0.11
Autocorrelation	0.10
Heteroskedasticity	0.12

Source: Authors Estimations, 2023.

Table 9. OLS estimate.

Variables	Coefficients	Std. error	t-Statistics	p-Value
ED	2.23	0.09	24.60	0.000
SD	1.23	0.10	12.74	0.000
EMPLA	−0.44	0.06	−7.04	0.000
GEA	0.57	0.03	14.29	0.000
CRA	0.02	0.01	2.73	0.000
EX	0.04	0.05	7.91	0.000

Source: Authors Estimations, 2023.

World Bank Publications. (2020). World Development Indicators. World Bank: World Bank International Debt Statistics.

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Data availability statement

Data supporting the study would be made available on request.