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Dutch Disease and Oil: A Case Study of Nigeria and Ghana

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  • Abdou Baoua, Mahamane Moutari

Abstract

The purpose of this paper is to analyze the effects caused by the relationship between natural resource (especially the crude oil) exploitation and decline of the agriculture or manufacturing industry in Nigeria and Ghana. The phenomenon that links exploitation of natural resources and decline of domestic manufacturing is called “Dutch disease”. In order to understand the degree of influence of this Dutch disease, we analyzed the behavior of exports of goods, oil exportations, the exchange rates, and agricultural and manufacturing sectors of both countries using graphs. We found curse of natural resources case in Nigeria which is due to the oil dependence in its economy. The effect of Dutch disease in Ghana was huge in 2011 but this effect decreased in 2013 due to the decline of oil exportation or oil dependence in the economy. Increases in oil revenue led to an appreciation of Ghanaian Cedi (GH₵). Policies must be made in both Nigeria and Ghana to successfully support the exploitation of their oil while simultaneously boosting other sectors of their economies as well.

Suggested Citation

  • Abdou Baoua, Mahamane Moutari, 2017. "Dutch Disease and Oil: A Case Study of Nigeria and Ghana," MPRA Paper 125994, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:125994
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    References listed on IDEAS

    as
    1. Isabell Adenauer & Laurence Vagassky, 1998. "Aid and the real exchange rate: Dutch disease effects in African countries," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 33(4), pages 177-185, July.
    2. Harry A. Sackey, 2001. "External aid inflows and the real exchange rate in Ghana," Working Papers 93152d10-3d0d-4a67-ba18-a, African Economic Research Consortium.
    3. repec:aer:wpaper:a1dfbd5ca4af is not listed on IDEAS
    4. Owen Barder, 2006. "A Policymakers' Guide to Dutch Disease," Working Papers 91, Center for Global Development.
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    JEL classification:

    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources

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