MEASURING THE EFFECTS OF PRODUCTIVITY GROWTH ON POVERTY IN GHANA USING BETA REGRESSION APPROACH

Abstract

This paper sought to establish the link between the rate of poverty (deprivation) on one hand, and output and productivity growth on the other among the apparel manufacturers in Ghana using primary data collected from 140 apparel manufacturers over 2002 to 2007 period. This is in line with literature that poverty can be reduced by building competitiveness in the manufacturing industry. The study relied on Beta Regression methodology to model the rates of deprivation and productivity growth all defined over the interval (0, 1).  This is because, functions define over the interval (0, 1) could be nonlinear and exhibit flexible characteristics which must be captured for accurate predictions. Our results indicate that output growth had some significant effects on poverty reduction albeit not a large one. Specifically, the paper established that, an increase in output growth by one unit holding other factors constant, induces a nominal change in poverty by -0.002 units over the period. However, the hypothesis that total factor productivity growth has had any significant effect on poverty over the period was not borne out by the results.  This results corroborates the assertion that poverty reduction can be linked to output growth and firm performance.