Investigating the Relationship Between Local Business and Employment Creation for Poverty Reduction in Northern Ghana: The Moderating Role of Local Economic Development (LED) Policy

Abstract

In the past few decades, the local economic development (LED) policy has gained prominence in Ghana as an effective bottom-up approach for poverty reduction and rural development. Adopting this bottom-up approach to reducing poverty, this paper investigates the impact of local business and local employment creation on poverty reduction in Ghana by employing the moderating role of LED policy. Data were obtained through an online survey platform from 357 respondents from local government officials working within the various districts across the northern parts of Ghana. The study used structural equation model analytical tool to examine the relationships between the variables. The findings affirmed both local business and local employment creation as positive determinants of poverty reduction. Also, employing LED policy as a moderator, local business creation plays the most significant role in reducing poverty at a 1% significant level. However, the moderating role of LED policy between local employment and poverty reduction was insignificant. Also, local employment insignificantly mediated local business and poverty reduction. Therefore, there is a need for development actors at local and international levels to collectively make a continuous effort to drive the local economic development policy agenda. This can be done through the promotion of local businesses creation to improve standards of living and reduce poverty to the lowest level in Ghana and other developing countries at large.