Innovation and Productivity as Engines of Economic Growth in Ghana

This paper examines the dynamic relationship between innovation, total factor productivity (TFP), and economic growth in Ghana using annual data for the period 1965–2021. Although Ghana has recorded relatively strong economic growth, concerns remain regarding the sustainability of this performance in the absence of consistent productivity improvements. The study combines growth accounting techniques with time-series econometric methods, including the autoregressive distributed lag–unrestricted error correction model (ARDL–UECM), vector error correction modelling (VECM), Granger causality tests, and two-stage least squares estimation. The results provide robust evidence of a stable long-run equilibrium relationship among innovation, productivity, and output. Innovation exerts a positive and statistically significant effect on economic growth, primarily through productivity-enhancing channels, while TFP emerges as the dominant long-run driver of growth. Short-run dynamics reveal feedback effects between innovation, productivity, and economic growth. However, growth accounting results indicate substantial volatility in TFP growth, suggesting that Ghana’s expansion has been driven largely by factor accumulation rather than sustained efficiency gains. The findings offer policy-relevant insights for productivity-centred growth strategies in Sub-Saharan Africa.