The Impact of Oil and Gas Extraction in Sub-Saharan Africa: Evidence from Ghana
Date
2023
Authors
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Journal ISSN
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Publisher
Academic Journal of Interdisciplinary Studies
Abstract
The topic of how oil and gas extraction impact on economic development of nations is well researched,
especially African oil-producing countries. Literature has revealed that countries endowed with natural
resources tend not to grow in terms of Gross Domestic Product (GDP) compared to their counterparts with
limited or no such natural resources. This phenomenon has been characterized as the paradox of plenty. The
study sought to evaluate the economic impact of oil and gas extraction in Ghana. The study utilized the
quantitative research approach with secondary data from World Bank Development Indicators, 2019.
Johansen Co-integration Approach was also used to evaluate the extent of causality between oil production
(revenues) and the various economic variables. The Johansen Co-integration test revealed that oil revenue
exerts a significant effect on Ghana’s GDP (4% higher than the average GDP before the production of oil and
gas). Meanwhile, the average agriculture value-added and service value-added of Ghana for the period after
the production of oil is lower than the average agriculture value-added and service value-added for the period
before the production of oil in commercial quantities. The study used Ghana as a case study which somehow
limits its findings. Future studies may use a panel model to do a cross-country analysis of the impact of oil
and gas production on the various sectors of the respective countries. Government should formulate and
expand policies (such as planting for food and jobs, and agricultural mechanization) that will help grow the
agricultural and service sectors of the economy using oil revenues. The study also recommends that the
Public Interest and Accountability Committee (PIAC) should closely monitor and collaborate with the
petroleum revenue management institutions to ensure that oil revenues allocated to the government priority
sectors, especially agriculture and service, are fully implemented. This study differs from prior studies (novel)
because it aimed to determine the impact of oil and gas extraction on agricultural, industrial, and service
sectors before and after oil and gas production.
Description
Research Article
Keywords
Agriculture, extraction, industry