The Impact of Natural Resource Rent on Economic Growth of Ghana

Abstract

This study examines the effect of oil and gas resource rent on economic growth of Ghana for the period of 2007 to 2019. The study uses the bounds test approach to cointegration within the framework of autoregressive distributed lags model as the estimation strategy. The results from the study revealed that oil resource rent had a negative and significant relationship with economic growth of Ghana. However, gas resource rent had a positive impact on economic growth of Ghana. Furthermore, the study also found that foreign direct investment and exchange rate had significant positive relation with economic growth of Ghana respectively. For government expenditure, it exerts a negative impact on economic growth of Ghana.  Based on the negative and significant relationship with oil resource rent and economic growth of Ghana, it is recommended that the government should reduce taxes on oil industries to help increase the production of oil and gas in Ghana. Furthermore, the study recommends Government and private partnership to ensure effective management of exchange rate fluctuations in Ghana.