Oil And National Development In Ghana

Abstract

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. The institutional theory of resource curse was used as our framework of analysis. We argued that it is not the natural resources that determines its effect on an economy rather that it is the operational underpinnings of the institutions in place and the legal regimes that determines the management, regulations and uses of the oil revenue and wealth that actually dictate whether the resource will be a blessing or curse within an economy. The study make use of observation method of secondary sources of textbook, journals, magazines, conference papers, official documents and Internet sources. It also adopted the qualitative descriptive method of analysis as our method of data analysis. Through which we, found that Ghana will escape the resource curse conundrum by adopting and implementing oil governance best practices as is the case with Alaska, Norway and Botswana. It was also discovered that with the right management and use of oil revenue that will manifest in macro-economic stability in addition of other factors that oil discovery and production will continue to attract Foreign Direct Investment (FDI) into Ghana. Drawing from this, the work argues that the development of institutions and policies that pursue prudent macroeconomic and fiscal policies will save Ghana from resource curse.