THE IMPACT OF TRADE ON HOUSEHOLD WELFARE IN GHANA

Sammanfattning: The distributional impacts of trade liberalisation across households’ groups vary in its degree. The objective of this study is to examine the effect of the Common External Tariff (CET) of the Economic Community of West African States (ECOWAS) on domestic price of agricultural goods in Ghana in the year 2017. Also, I analyse the effect of price change on the welfare of rural households from the perspective of households as both consumers and producers. The study analyses the impacts across the regions in Ghana. The findings indicate that in the year 2017, price of agricultural goods declined due to the reduction in the ECOWAS CET. However, the tariff pass-through rate was relatively low at 14 percent. When there has been an interaction between tariff and distance (trade cost), the findings suggest that the magnitude at which tariff reduction transmits to various regions or geographical zones in Ghana differs. The transmission rate declines the farther away a region is to the harbour. The findings indicate that households as producers have experienced a marginal decrease in income due to the reduction in the price of agricultural goods. On the other hand, households as consumers have benefitted as there have been an increase in their income through the reduction in the cost of their consumption basket.