Impact of Economic Growth on Poverty Reduction: Evidence from Ghana

Abstract

The main purpose of this article is to examine the effect of economic growth on poverty reduction in Ghana using monetary measurement approach. A time series data was collected on the variables deemed to influence the above relationship including headcount poverty, government spending, inflation, unemployment, and per capita growth in GDP. The data span from 1990 to 2021 and was sourced from the World Development indicators wxebsite. The data was analyzed using autoregressive distributed lags (ARDL) regression model and augmented Dickey-Fuller (ADF) for unit root test. The findings showed that economic growth and government spending have an inverse but significant interrelationship with reduction of poverty. Also per capita GDP has a significant positive relationship with poverty reduction. The annual inflation levels have an inverse insignificant impact on poverty reduction. The relationship between unemployment and poverty alleviation is positive though insignificant. Government should put appropriate policies in place to sustain economic growth at appreciable levels in order to reduce poverty. Agricultural productivity should be improved to provide jobs for teeming unemployed youth. Inflation should be curtailed and kept at moderate levels to ginger economic activities in the country. The Government should spend on pro-poor activities and economic infrastructure to grow the economy, create jobs, reduce income disparity, and alleviate poverty. Keywords: Monetary poverty, Multidimensional poverty, Economic growth, Government spending, Ghana.