Abstract

Asare Eric, Segarra Eduardo, and Nakakeeto Gertrude

The cocoa export tax has been an indispensable source of revenue to Ghana. Following the Cobweb production model, it is hypothesized that the lags of cocoa export tax and the producer price of cocoa would have significant effects, on cocoa export from Ghana. The study tested the above hypothesis by estimating a system of equations with the three-stage least squares procedure. The system of equations, included the export supply equation, import demand equation and the producer price of cocoa equation. The null hypotheses of homoscedastic and no autocorrelation were not rejected in the model, even at the 10 percent level. The results show that a 1% increase in the lag of export tax cocoa and producer price of cocoa decreases (increases) cocoa bean exports by 1.2% (1.9%). The study recommends that the government of Ghana implements policies and programs that eliminate potential inefficiencies in the marketing of the crop in Ghana (which is state-controlled) so that a stable level of producer price of cocoa could be sustained. It could lead to an increase in Ghana’s cocoa exports.