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Business News of Wednesday, 15 November 2006

Source: GNA

Growth now expresses itself in export

Accra, Nov. 15, GNA - Studies have shown that trade no longer serve as a yardstick for growth in Less Developed Countries (LDCs) as it did for developed nations in the past.

Mrs Araba Forson, Assistant Chief Statistician of the Ghana Statistical Service, said the only hope for growth is the export sector, which uses the unlimited supply of labour available in the traditional sector.

"Thus export, the main source of demand in the economy, is the key to growth," she said on Wednesday.

Mrs Forson noted that most of LDCs' trade involved the export of raw materials, fuel, minerals and some food products to the industrialized, rich and developed countries (DC), in exchange mostly for manufactured goods.

She said the complaint has been on the trade pattern since their internal conditions differed widely from those in developed nations and also because of the way in which the present international monetary system operated.

"...Most of the benefits of international monetary own growth accrues to developed nations, primarily in the form of secularly improving terms of trade," Mrs Forson said.

Delivering a lecture to mark the Ghana Statistical Service (GSS) weeklong activities, Mrs Forson, however said while trade was seen as directly contributing to growth in the past, some development economists recently questioned its role as an engine of growth for LDCs. She drew her analysis and assertions from several economic theories to buttress the position that the 'engine' for LDC's exports has been low due to a slow down in the developed nation's economies, changes in tastes, secularly improving terms of trade.

Mrs Forson said the study sought among other things to determine the effect of export on the growth of the Gross Domestic Product in LDCs for the period 1970 - 1990 and considered whether structural adjustment programmes adopted by most countries in the early eighties had altered the effect of exports on their economies.

She said the relation between export performance and economic growth has been a subject of consideration for development economists in recent years.

According to her, empirical observations across countries tended to demonstrate that developing countries with favourable export growth record tend to enjoy higher rates of growth of national income. LDCs at present account for less than one-fourth of world trade.