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Revisiting the resource curse: Natural resource rents as drivers of economic growth in Ghana using advanced nonlinear techniques

Author

Listed:
  • Prempeh, Kwadwo Boateng
  • Musah, Mohammed
  • Appiah, Thomas
  • Danso, Felix Kwabena

Abstract

Given that Ghana has implemented progressive governance frameworks including the Petroleum Revenue Management Act (2011) and established the Public Interest and Accountability Committee to manage its diverse natural resource endowments, this study assesses the impacts of natural resource rents, financial development, trade openness, and urbanisation on Ghana's economic growth performances while examining whether resource curse effects operate at the sectoral rather than country level. In this regard, this study uses annual data spanning from 1980 to 2021 and employs advanced nonlinear econometric techniques, including Kernel-based Regularised Least Squares (KRLS) and Quantile-on-Quantile Regression (QQR), to capture heterogeneous relationships across the growth distribution. According to the findings, Ghana simultaneously experiences both blessings and curses in terms of resources across various sectors. Specifically, mineral rents and oil rents exhibit positive growth effects, while forest rents and natural gas rents demonstrate negative impacts. Financial development shows threshold effects, influencing growth only beyond certain maturity levels, while urbanisation consistently drives growth across all quantiles. Trade openness exhibits conditional relationships with adverse effects at lower development stages that improve at higher stages. Furthermore, the Granger causality test findings reveal bidirectional relationships between urbanisation and economic growth, as well as unidirectional causality from economic growth to financial development. These results have important policy implications, particularly for Ghana's prospects of transforming resource curse sectors into blessing sectors through differentiated governance strategies. Considering the key findings, the Ghanaian government should strengthen regulatory frameworks and transparency mechanisms in curse sectors (forest and natural gas) by adopting institutional arrangements similar to those successfully implemented in the blessing sectors (mining and oil). Further, to maximise growth benefits, the government should pursue sequenced financial sector development, recognising threshold effects. It should carefully stage trade liberalisation to ensure domestic industrial competitiveness and sustain urban development investments. Additionally, implementing balanced regional development strategies will address urban-rural disparities and ensure inclusive growth across Ghana's diverse economic landscape.

Suggested Citation

  • Prempeh, Kwadwo Boateng & Musah, Mohammed & Appiah, Thomas & Danso, Felix Kwabena, 2025. "Revisiting the resource curse: Natural resource rents as drivers of economic growth in Ghana using advanced nonlinear techniques," Resources Policy, Elsevier, vol. 110(C).
    • Handle: RePEc:eee:jrpoli:v:110:y:2025:i:c:s0301420725003083
    DOI: 10.1016/j.resourpol.2025.105766
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    Keywords

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    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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