The Local Economic Effects of Natural Resources : Evidence from Ghana

This paper estimates the welfare impacts of natural resources by analyzing Ghana’s offshoreoil discovery and subsequent production. It finds substantial increases in real income, but no effect onconsumption and poverty. The income effects are stronger for skilled workers. Estimates of the effects of oil discoveryon employment show that employment in general increased by 4 percentage points. The positive employment effects arelargely concentrated in non-oil local sectors: manufacturing and construction. The findings do not show significantimpacts on employment in the agriculture and service sectors where a large proportion of individuals below the povertyline are engaged. This largely explains why the oil discovery had no effect on poverty reduction, as itbenefited the non-poor rather than the poor.