Crude Oil Export of Ghana and Its Impact on the Economy (original) (raw)
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The study examined the impact of crude oil discovery, exploitation and exportation on the agricultural commodity export (AGO) in Nigeria in the period 1970-2011. Specifically, the study sought to evaluate how the discovery and exportation of crude oil has impacted on the production and export of agricultural output. Annual time series data sourced mainly from the Central Bank of Nigeria (CBN) statistical bulletins for various years were analyzed using co-integration and vector error correction model in a bid to delineate the long run relationship between (AGO) and oil export (OX). Our results show that in the long run, Dutch disease (DD) is present in Nigeria. A 1% increase in OX will depress AGO by 16%, that is, the more Nigeria produces and exports oil, the lower the output and less competitive the traditional tradable sector (AGO) becomes. The paper recommends that policy makers should make considerable investments in developing other economic sectors, re-channel the extra revenue from oil to accumulate income-producing foreign assets, and come up with a number of tax and import duty waivers, import substitution and diversification measures in order to boost productivity in the "lagging" traditional tradable sector and develop other agro-allied industries to improve the value chain.
The study examined the impact of crude oil discovery, exploitation and exportation on the agricultural commodity export (AGO) in Nigeria in the period 1970-2011. Specifically, the study sought to evaluate how the discovery and exportation of crude oil has impacted on the production and export of agricultural output. Annual time series data sourced mainly from the Central Bank of Nigeria (CBN) statistical bulletins for various years were analyzed using co-integration and vector error correction model in a bid to delineate the long run relationship between (AGO) and oil export (OX). Our results show that in the long run, Dutch disease (DD) is present in Nigeria. A 1% increase in OX will depress AGO by 16%, that is, the more Nigeria produces and exports oil, the lower the output and less competitive the traditional tradable sector (AGO) becomes. The paper recommends that policy makers should make considerable investments in developing other economic sectors, re-channel the extra revenue from oil to accumulate income-producing foreign assets, and come up with a number of tax and import duty waivers, import substitution and diversification measures in order to boost productivity in the "lagging" traditional tradable sector and develop other agro-allied industries to improve the value chain.
OBED ARYEE DUTCH DISEASE EFFECTS OF OIL DISCOVERY IN GHANA
ANALYZING THE DUTCH DISEASE EFFECTS OF THE OIL DISCOVERY IN GHANA
It is usually claimed that countries that discover abundant natural resources (especially oil and gas) are likely to suffer from Dutch Disease (a kind of Natural Resource Curse). The symptoms of the Dutch Disease are often shown when a country’s currency appreciates and its traditional export sectors (agricultural and manufacturing sectors) become less competitive. The less competitiveness of the traditional export sectors eventually causes structural changes in the economy by reducing output and employment and increasing the general price level. This paper studied possible occurrence of Dutch Disease through four main transmission channels: currency appreciation effect, spending effect, resource movement effect and saving, investment and physical capital effect. The paper further investigates that corruption, conflict and political instability, mismanagement of oil revenues, over dependent on natural resources as primary exports and oil price fluctuations are likely factors that can cause oil curse in oil-rich nations. It is asserted that Ghana may be a victim of the Dutch Disease as a result of its recently discovered oil. Therefore, it is the aim of this paper to analyze whether Ghana could be affected by the Dutch Disease through either currency appreciation effect, spending effect or the resource movement effect by examining the impact of the expected oil revenue inflows on Ghana’s exchange rate, agricultural output and its inflation. Since the oil revenue is yet to come in the future, the paper adopts an ex post study approach by using export earnings of gold as a proxy for the expected oil revenue inflows in the various tests. This paper uses Multiple Linear Regression (MLR) analysis to show that the Dutch Disease is less likely to occur in Ghana. The paper discovered that the expected oil revenue inflows would rather cause the Ghana cedi to depreciate rather than to appreciate. Again, the paper discovered that the expected oil revenue inflows would have an insignificant negative impact on agricultural output and inflation. Finally, the paper ends with policy recommendations such as using managed float to control the exchange rate, choosing monetary policies that are consistent with fiscal policies to stabilize the economy, diversifying the economy away from natural resource-based exports into a more income enhancing export products, and mapping out strategies to curtail corruption.
The New Oil Sector and the Dutch Disease: the Case of Ghana
Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 2015
This paper investigates the impact of the new oil sector on the economic performance of major traditional sectors of the Ghanaian economy. The discovery of resource booming sectors in most countries o en comes with several opportunities as well as challenges. Ghana discovered oil in 2007 and started subsequent commercial production and export in 2010. The results from the study show that, there is no clear case of declining performance of sectors in terms of output, growth and export earnings as a result of the oil production. The study could also not establish a sustained appreciation in the real eff ective exchange rate since commercial oil production commenced which is an indicator of the presence of the Dutch Disease phenomenon. The real eff ective exchange rate was also found to be highly infl uenced by oil production, oil prices, total exports and remittances. The study applied an autoregressive distributed lag model due to diff erences in the level of integration of variables. The data was obtained from the Bank of Ghana, the Ministry of Finance in Ghana and the Energy Information Administration.
Empirical analysis of crude oil consumption and price on Ghana’s economic growth
Open Science Journal
The objective of this paper was to investigate the impact of crude oil consumption and oil price on the growth of the Ghanaian economy. It proceeded with annual time series data (1980-2016) sourced from World Development Indicator (WDI) and Energy Information Administration (EIA). All variables used in the study were integrated of order one as suggested by the Augmented Dickey-Fuller (ADF) test. Further, the Johansen Cointegration test suggested the existence of cointegration among the variables. The study used the OLS estimation procedure.The study found a positive and statistically significant relationship between oil price and economic growth in the long run. On the other hand, an inverse relationship was found between crude oil consumption and economic growth in the long run.Based on the findings the study recommends that the government diversify the economy to reduce the shock the economy might experience in times of oil price shocks. Further, risk management instruments like p...
Oil Exploitation and Agricultural Commodity Export in Nigeria
The study examined the impact of crude oil discovery, exploitation and exportation on the agricultural commodity export (AGO) in Nigeria in the period 1970-2011. Specifically, the study sought to evaluate how the discovery and exportation of crude oil has impacted on the production and export of agricultural output. Annual time series data sourced mainly from the Central Bank of Nigeria (CBN) statistical bulletins for various years were analyzed using co-integration and vector error correction model in a bid to delineate the long run relationship between (AGO) and oil export (OX). Our results show that in the long run, Dutch disease (DD) is present in Nigeria. A 1% increase in OX will depress AGO by 16%, that is, the more Nigeria produces and exports oil, the lower the output and less competitive the traditional tradable sector (AGO) becomes. The paper recommends that policy makers should make considerable investments in developing other economic sectors, re-channel the extra revenue from oil to accumulate income-producing foreign assets, and come up with a number of tax and import duty waivers, import substitution and diversification measures in order to boost productivity in the "lagging" traditional tradable sector and develop other agro-allied industries to improve the value chain.
A COMPARATIVE ANALYSIS ON THE ROLE OF CRUDE OIL AND NON-OIL EXPORTS ON NIGERIAN ECONOMY
Oil export and nonoil export have remained sources of revenue for Nigeria over the years, however the over dependence on oil sector and neglect of the nonoil sector has raised issues on which export sector impacts more on the Nigeria economy. This study therefore carried out comparative analysis on the role crude oil export and nonoil export in relations to Nigeria's economic growth. Data were collected from CBN statistical bulletin from 1980-2015. OLS, Augmented dickey fuller, co-integration and error correction model were used to analyze the data. Findings suggest that both oil export sector and nonoil export sector have positive impact on GDP. The ADF showed that all the variables are stationary at first order of difference while the co-integration shows that two cointegrating variables. The error correction model indicates that oil export sector and nonoil export sector have long run relationship with Nigeria's GDP. It concludes that nonoil export has greater impact on the economy than the oil export sector for the period under review. Based on the findings, it is recommended that the government should implement export diversification policies. Non-oil sector exports should be encouraged. The development of the nonoil export sector will further improve the volume of exports and balance of trade in Nigeria.
CRUDE OIL PRICE AND GROWTH OF OUTPUT: THE CASE OF GHANA
Ghanaian economy vulnerable to fluctuations in the world price of crude oil, especially when the country still depends largely on imported crude oil to meet her crude oil needs. This study therefore employed the ARDL approach to cointegration to examine the relationship between crude oil price and Ghana's economic growth using annual data set from 1967 to 2012. Unlike previous studies on crude oil price economic growth relationship for Ghana, this study controlled for the effect of fiscal policy in the relationship. This study adopts the neoclassical growth model of Solow. The results of the study indicated the existence of a long run relationship between crude oil price and economic growth in Ghana. Also, the study revealed that oil price increases had a negative impact on economic growth in both the short run and long run and this was reinforced by increases in government expenditure in response to the oil price in the form of fuel subsidies. The policy implications of the study are that fuel subsidies should be removed and the country should consider alternative sources of energy which are cheaper relative to crude oil price.
Do oil prices influence economic growth in Ghana? An empirical analysis
Cogent Economics & Finance
The study examined the causal linkage between oil price change and economic growth. The study made use of secondary data that were extracted from World Development Indicators and International Financial Statistics. Descriptive statistics, unit root test, Johansen cointegration test and Granger causality test were employed to analyse the data. The results of the study revealed that there exists an inverse relationship between oil price change and economic growth in Ghana. However, the effect of oil price change on economic growth is statistically insignificant in the long run. The result of the Granger causality similarly revealed a unidirectional causality between oil prices and economic. In conclusion, the variation in oil price has no effect on the growth of the Ghanaian economy; hence, policies to influence economic growth should be independently pursued of oil price changes.
Oil Exportation and Economic Growth in Nigeria
Oil Exportation and Economic Growth in Nigeria, 2019
This paper examines the economic impact of oil exportation on Nigerian economy from 1970-2012. The objective of the study is to look at the impact of oil exportation on the economic growth in Nigeria. Secondary data were collected based on the model used in the research work and unit root test was conducted on the data to test their stationary, after which we perform co-integration test to analyze the long run relationship among the variables and VECM and impulse response was also employed for the analysis. The result obtained from our empirical analysis shows that there exist a long run relationship between the dependent variable and the explanatory variables. The conclusion of the study is that Exports should not be promoted at all cost, but rather the utilization and allocation of the physical resources and labor complement of the country in the most advantageous combination as between production for the local and foreign markets and that diversification should be seen as an economic management strategy aimed at ensuring stability of incomes.