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Asymmetrical effect of oil and gas resource rent on economic growth: Empirical evidence from Ghana

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  • Opoku Adabor
  • Emmanuel Buabeng
  • Raoul Fani Djomo Choumbou

Abstract

We investigate the asymmetric effect of oil and gas resource rent on economic growth of Ghana for the period 2010 to 2019, dwelling on the hypothesis that natural resources extraction has double-edge effect on economic growth. Using Nonlinear Autoregressive Distributed Lag (NARDL) model as estimation strategy, we find that oil and gas resource rent affect economic growth asymmetrically. Specifically, our NARDL estimates suggest that oil resource rent promotes economic growth significantly, providing empirical evidence in support of the resource blessing hypothesis. However, gas resource rent exerts a significant adverse effect on economic growth, providing empirical evidence to support the resource curse hypothesis. Our findings point to the need for policies that promote the expansion of oil resources firms than gas resource firms in the short run while long term policies should target setting up both oil and gas resource firms in developing countries, especially countries with similar socioeconomic and demographic setting like Ghana. Finally, government and monetary authorities should promote policies that attract foreign direct investment inflow in Ghana while taming inflation and lending rate towards growth enhancing targets.

Suggested Citation

  • Opoku Adabor & Emmanuel Buabeng & Raoul Fani Djomo Choumbou, 2021. "Asymmetrical effect of oil and gas resource rent on economic growth: Empirical evidence from Ghana," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1971355-197, January.
    • Handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1971355
    DOI: 10.1080/23322039.2021.1971355
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    Cited by:

    1. Achuo, Elvis D., 2023. "Resource wealth and the development dilemma in Africa: The role of policy syndromes," Resources Policy, Elsevier, vol. 83(C).
    2. Adabor, Opoku & Mishra, Ankita, 2023. "The resource curse paradox: The role of financial inclusion in mitigating the adverse effect of natural resource rent on economic growth in Ghana," Resources Policy, Elsevier, vol. 85(PA).
    3. Bayuasi Nammei Luki & Abdallah Ali-Nakyea & Hussein Salia & Muntari Mahama, 2023. "The Impact of Oil and Gas Extraction in Sub-Saharan Africa: Evidence from Ghana," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 12, March.
    4. Ofori-Sasu, Daniel & Adu-Darko, Eunice & Asamoah, Michael Effah & Abor, Joshua Yindenaba, 2023. "Oil rents, trade environment and financial development: An international evidence," Resources Policy, Elsevier, vol. 82(C).
    5. Arvian Triantoro & Muhammad Zaheer Akhtar & Shiraz Khan & Khalid Zaman & Haroon ur Rashid Khan & Abdul Wahab Pathath & Muhamad Amar Mahmad & Kamil Sertoglu, 2023. "Riding the Waves of Fluctuating Oil Prices: Decoding the Impact on Economic Growth," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 34-50, March.

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