Unraveling Ghana’s Resource Curse Hypothesis: Analyzing Natural Resources and Economic Growth with a Focus on Oil Exploration

Abstract

This study examines the intricate relationship between natural resource abundance, with a specific focus on oil production, and its impact on economic growth in Ghana. Through the application of the robust Fully Modified OLS methodology and using data spanned from 1960–2021 the research underscores the essential inclusion of oil as a significant variable in comprehending economic growth dynamics. Contrary to traditional resource curse theories, the study unveils a positive nexus between oil production and economic growth, particularly within a comprehensive variable framework. This finding challenges simplistic resource curse notions and underscores the need for a holistic economic perspective. Overall, the results show that the impact of oil production on economic growth is sensitive to the inclusion or exclusion of other variables in the model. In Model 1, where all variables are included, oil production has a significant positive (0.0112**) impact on growth. Ghana’s success in avoiding the resource curse is attributed to a multifaceted strategy encompassing diversified economic approaches, transparent governance, and responsible oil revenue management. Importantly, the inclusion of oil as a pivotal variable is well-justified by its tangible contributions to economic growth. The observed positive impacts emphasize the benefits of harnessing oil resources while maintaining a holistic view of the broader economic context. Looking ahead, the insights inform policymakers in resource-rich nations, illustrating how strategic resource management—illustrated by oil—can drive resilient and comprehensive economic growth. Ghana’s experience serves as a compelling template for informed policy decisions, offering valuable lessons for achieving sustainable prosperity.