The Price Incentive to Smuggle and the Cocoa Supply in Ghana, 1950-96
26 Pages Posted: 15 Feb 2006
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The Price Incentive to Smuggle and the Cocoa Supply in Ghana, 1950-96
The Price Incentive to Smuggle and the Cocoa Supply in Ghana, 1950-96
Date Written: June 1998
Abstract
From the early 1960s to the early 1980s, the officially recorded production of cocoa in Ghana declined by 60 percent. During the 1983-95 Economic Recovery Program, however, cocoa production doubled. Although these developments have inspired much empirical research, most of the studies have been unable to explain the medium-term persistence of cocoa output to remain below its estimated capacity level. The paper argues that the price incentive to smuggle can explain as much as one-half of the observed decline in output and the subsequent recovery. A cointegration analysis and a dynamic error-correction model of cocoa supply support the analysis.
Keywords: Ghana, cocoa supply, smuggling, commodity taxation, cointegration
JEL Classification: C22, O55, Q11
Suggested Citation: Suggested Citation