Unlocking Ghana's Tourism Potential: Insights from Macroeconomic Analysis

Abstract

This research investigates the key macroeconomic factors influencing tourism revenue in Ghana from 1970 to 2015. A comprehensive review of both theoretical and empirical studies related to the subject was conducted. The research aimed to identify how these macroeconomic variables affect tourism income, utilizing an econometric model where tourism revenue is the dependent variable, influenced by several independent variables such as income levels, trade openness, nominal interest rates, the consumer price index, and the exchange rate. To analyze the data, time series methodologies were applied, including the Augmented Dickey-Fuller test to detect unit roots and the Johansen and Juselius test for cointegration. The analysis demonstrated a long-term cointegration relationship between tourism revenue and the selected macroeconomic indicators. Specifically, trade openness, the consumer price index's rate of change, and the exchange rate were identified as significantly affecting tourism earnings. Based on the findings, the study recommends that to enhance tourism revenue, the Ghanaian government should implement sound macroeconomic strategies, focusing on increasing trade openness, maintaining a low inflation rate, and ensuring a realistic exchange rate.