Oil and Gas Production and the Growth of Ghana’s Economy: An Initial Assessment

Abstract

Oil and gas resources present enormous opportunities for the economic development of low income economies, but poor management of these resources can result in dire consequences for the foundations of the resource-endowed nation. The discovery of oil and gas in Ghana is as significant as the policies and measures to ensure optimum benefits to the nation. This paper evaluates the sustainability of petroleum production in the light of the medium term policy structure, the Ghana Shared Growth and Development Agenda (GSGDA). In particular, the economic contribution of oil and gas to Ghana’s GDP and sustainable investment options for petroleum revenues were examined using ordinary least squares (OLS) regression. The evidence suggests that at current production levels, petroleum is not a significant contributor to Ghana’s GDP after adjusting for the contribution from other sectors of the economy. The consistent appreciation of Ghana’s real effective exchange rate between 2010 and 2013 led to a deterioration of the competitiveness of the non-oil sector and declining contribution of the agricultural sector to GDP; and further eroded the net impact of petroleum production. Investing petroleum proceeds in the non-oil sector and expansion of the export base are a viable option for utilising petroleum revenues.

The causative relationship between natural resource rent and economic growth: evidence from Ghana’s crude oil resource extraction

“…The magnitude and the sign of the coefficient of oil resource rent imply that 1% increase in oil revenue generates 0.84% increase in GDP, ceteris paribus. This finding is consistent with some existing studies (Olayungbo, 2019;Lukman et al, 2018;Ahmad and Masan, 2015) but contradicts findings from Wang et al (2021) and Acquah-Andoh et al (2018). Economically, this implies that the extraction of crude oil generates revenue to both the producing firm and government, which is shared between the two parties based on law/contract.…”

“…We now focus on some studies within Sub-Sahara Africa and its environment that used different estimation strategies to examine the relation between oil production and economic growth. Within this literature, Acquah-Andoh et al (2018) examine linear relationship between oil production and Ghana's GDP growth using ordinary least squares (OLS) regression as an estimation strategy. They found that recent production of oil does not contribute significantly to the GDP growth of Ghana.…”

“…One strand of literature argues that crude oil production promotes economic growth and development, supporting the growth hypothesis (Nesheim et al , 2006; Tamba, 2017; Mawejje, 2019). Contrary, the other strand of the literature also suggests that crude oil production is associated with negative outcomes such as Co 2 emission, air and water pollution, displacement of individual, conflict and civil war which impedes economic growth and development (Bannon and Collier, 2003; Plänitz and Kuzu, 2015; Acquah-Andoh et al , 2018). We contribute to this literature by conducting a robust analysis on the causal link between crude oil resource rent and economic growth where empirical evidence appears to be insufficient.…”

Responsible leadership, job satisfaction and duty orientation: lessons from the manufacturing sector in Ghana

“…The manufacturing sector alone in Ghana accounts for about 25.3% of the total gross domestic product. Ghana's industrial production is rising at a 7.8% rate, giving it the 38th fastest growing industrial production in the world because of government industrialization policies (Mekpor and Dartey-Baah, 2019;Acquah-Andoh et al, 2018). Although these trends in the sector look promising, it is becoming increasingly difficult to attract and retain employees who are fully engaged with Responsible leadership and duty orientation 921 their work.…”

Renewable Energy Policies in Ghana

“…The policy was also to encourage the development and use of renewable energy resources and create a climate conducive to investment in renewable energy resources. The policy was as well to promote the use of renewable energy, diversify renewable energy supplies to provide energy security and enhance access to electricity [23,[47][48][49][50] . Public education on renewable energy production and use is needed to establish indigenous capacity in renewable energy technology in order to fulfil the goals of other international bodies [21] .…”