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Managing Future Oil Revenues in Ghana: An Assessment of Alternative Allocation Options

Author

Listed:
  • Clemens Breisinger
  • Xinshen Diao
  • Rainer Schweickert
  • Manfred Wiebelt

Abstract

Contemporary policy debates on the macroeconomics of resource booms often concentrate on the short-run Dutch disease effects of public expenditure ignoring the possible long-term effects of alternative revenue-allocation options and the supply-side impact of royaltyfinanced public investments. In a simple model applied here, the government decides the level and timing of spending out of resource rents. This model also considers productivity spillovers over time, which may exhibit a sector bias toward domestic production or exports. A dynamic computable general equilibrium model is used to simulate the effect of temporary oil revenue inflows to Ghana. The simulations show that beyond the short-run Dutch disease effects, the relationship between windfall profits, growth and households’ welfare is less straightforward than what the simple model of the "resource curse" suggests. The CGE model results suggest that designing a rule to smoothing in and out of oil revenues between productivity enhancing investments and an oil fund is crucial to achieving both shared growth and macroeconomic stability.
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Suggested Citation

  • Clemens Breisinger & Xinshen Diao & Rainer Schweickert & Manfred Wiebelt, 2010. "Managing Future Oil Revenues in Ghana: An Assessment of Alternative Allocation Options," African Development Review, African Development Bank, vol. 22(2), pages 303-315.
    • Handle: RePEc:adb:adbadr:570
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    Cited by:

    1. Bryan, Elizabeth & Msangi, Siwa & Ringler, Claudia & Rosegrant, Mark W. & Sulser, Timothy B. & Zhu, Tingju, 2009. "Green and blue water accounting in the Limpopo and Nile Basins: Implications for food and agricultural policy," IFPRI discussion papers 907, International Food Policy Research Institute (IFPRI).
    2. Simplice A. Asongu & Oasis Kodila†Tedika, 2017. "Is Poverty in the African DNA (Gene)?," South African Journal of Economics, Economic Society of South Africa, vol. 85(4), pages 533-552, December.
    3. Viccaro, Mauro & Rocchi, Benedetto & Cozzi, Mario & Severino, Marino, 2015. "The socioeconomic impact derived from the oil royalty allocation on regional development," 2015 Fourth Congress, June 11-12, 2015, Ancona, Italy 207861, Italian Association of Agricultural and Applied Economics (AIEAA).
    4. Osei-Kojo, Alex & Bobbie, Lord Horlali & Andrews, Nathan & Wilkerson, Alex Dylan & Adams, Ellis Adjei & Leech, Nancy, 2024. "The state of research on Ghana’s oil and gas resources: Themes and future directions," Resources Policy, Elsevier, vol. 88(C).
    5. Wiebelt, Manfred & Pauw, Karl & Matovu, John Mary & Twimukye, Evarist & Benson, Todd, 2011. "Managing future oil revenues in Uganda for agricultural development and poverty reduction: A CGE analysis of challenges and options," Kiel Working Papers 1696, Kiel Institute for the World Economy.
    6. Manfred Wiebelt & Rainer Schweickert & Clemens Breisinger & Marcus Böhme, 2011. "Oil revenues for public investment in Africa: targeting urban or rural areas?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(4), pages 745-770, November.
    7. Marbuah, George, 2014. "Understanding crude oil import demand behaviour in Ghana," MPRA Paper 60436, University Library of Munich, Germany.
    8. Estrades, Carmen & Llambí, Cecilia & Perera, Marcelo & Rovira, Flavia, 2016. "Large-scale mining in a small developing country: Macroeconomic impacts of revenue allocation policies," Resources Policy, Elsevier, vol. 49(C), pages 433-443.
    9. Aïchatou Mourfou & Issaka Dialga & Idrissa Mohamed Ouedraogo, 2022. "Effets de l'exploitation des ressources naturelles sur la mobilisation des recettes fiscales non liées aux ressources naturelles dans l'Union Economique et Monétaire Ouest Africaine (UEMOA)," African Development Review, African Development Bank, vol. 34(2), pages 188-200, June.
    10. Chuku Chuku & Anthony Simpasa & Jacob Oduor, 2018. "Macroeconomic Consequences of Commodity Price Fluctuations in African Economies," African Development Review, African Development Bank, vol. 30(4), pages 329-345, December.
    11. Shashidhara Kolavalli & Elizabeth Robinson & Guyslain Ngeleza & Felix Asante, 2012. "Economic Transformation in Ghana: Where Will the Path Lead?," Journal of African Development, African Finance and Economic Association (AFEA), vol. 14(2), pages 41-78.
    12. Franklin Obeng-Odoom, 2013. "Windfalls, wipeouts, and local economic development: A study of an emerging oil city in West Africa," Local Economy, London South Bank University, vol. 28(4), pages 429-443, June.
    13. Breisinger, Clemens & Diao, Xinshen & Wiebelt, Manfred, 2014. "Can oil-led growth and structural change go hand in hand in Ghana?," Journal of Policy Modeling, Elsevier, vol. 36(3), pages 507-523.
    14. World Bank, 2016. "Moldova Trade Study," World Bank Publications - Reports 24043, The World Bank Group.
    15. Dzyuba, Yu. & Bakalova, I., 2023. "CGE models for resource-based economy: A comprehensive bibliometric analysis," Journal of the New Economic Association, New Economic Association, vol. 61(4), pages 12-50.

    More about this item

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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