Oil and National Development in Ghana.


Natural resource discovery in a country can be the beginning of the country’s economic growth. The wealth from the resources if well managed could promote sustained economic development.

The exploration and exploitation of natural resources is usually accompanied with the paradox of development and challenges. The discovery of oil in commercial quantity in Ghana in June 2007, has raised the hope of Ghanaians as it regards better days to come.

However, oil has its own effect on an economy. While it is supposed to be a blessing, empirical evidence reveals that it has frequently become a curse in most countries of the Third World, especially in the African Continent, where it usually produces and reproduces renting seeking, conflict, patronage, Dutch disease and resource curse.

The study seeks to investigate the interface between oil and national development in Ghana. The thrust of the study however, was to interrogate the possibility of oil serving as the pillar of the socio-economic development and transformation of the country;

while at the same time avoiding the perennial problem of resource curse and the Dutch disease that characterize most other oil producing African states.

On the account of this, we examined the ways through which Ghana can transform its oil natural resources into a blessing rather than a curse by devising transpraent and accountably oil oil governance best practices.

We hypothesised that Ghana can avoid the resource curse conundrum through the formulation of strong oil sector policies and the adoption of oil governance best practices and that there is a positive relationship between Oil discovery and production and the rate of Foreign Direct Investment (FDI) inflow into Ghana.


Background of Study

The citation above captures the situation that characterizes the Ghanaian economy and its fate in terms of the country’s quest and attempt at economic growth and development over the years.

However, with the coming of oil into the country’s litany of natural resource, it appears that its story is about to change. This is so because “oil fever” has gripped Ghanaians since the first major oil discovery in the country’s history was announced in June 2007.

Since that time, Ghana has rapidly emerged as an oil industry hotspot. While there has been some oil exploration over the past century, with a trickle of oil produced in the Saltpond field, it has only been in the past decade that serious efforts have been made.

Ghana is on the verge of becoming a major oil-producing and exporting country based on its proven reserves. Oil production in the country started on 17th December, 2010 however, this will quickly decline over the following decade as field capacity is tapped.

Ghana has an enviable record of good governance and stability. Despite this progress, Ghana is still a poor country of 23 million people that depend largely on primary commodity exports such as cocoa, gold and timber, with almost 80 percent of Ghanaians living on less than $2 a day (ISODEC, 2010:7).

However, with the recent discovery of oil and its maiden exportation; it is suggested that billions of dollars will be flowing into the government treasury,

But Ghanaians are all too familiar with corruption, poor development outcomes in the country’s mining communities, and the tragedy of Nigeria’s squandered oil wealth.

For the international oil industry, the 2007 “Jubilee” finds called one of the largest recent finds in Africa, has generated enormous interest in the country’s hydrocarbons potential.


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