Trade liberalisation and its impact on income distribution in Ghana

In this article, we analyse the impact of trade liberalisation on income distribution in Ghana using a computable general equilibrium (CGE) model. We focus on household income groups defined by location, economic activities and income quintiles using the 2013 social accounting matrix (SAM) for Ghana. Consistent with the existing literature, we find that trade liberalisation affects negatively the total and factor income and consumption spending of rural farm households, while it benefits urban non-farm households. Our results also suggest that import tariff reduction creates a substitution effect which decreases the demand for domestic commodities; ultimately affecting farmer's income, demand for labour and land, and crop capital rents.