HAS EXTRACTION OF OIL HELP GHANA’S ECONOMY? By Atta Peprah George
As Ghana enters the oil and gas era there are high expectations about the exploitation of oil may provide for the rest of the economy. It provides some fiscal space while offering the resources and opportunity to address some of the structural constraints to investment and our development. In 2 007 Ghana discovered the largest quantity of oil of any West African economy in the offshore Jubilee oil field. But Finding natural resources increases corruption and this is one of the reasons for the resource curse in Ghana. This has brought about not concentrating on other natural resources (Dutch Disease).
It is the process by which a boom in a natural resource sector of an economy leads to the shrinkage of the non-resource tradable sector. This makes the economy more dependent and vulnerable to the resource specific shocks. Although Dutch disease is generally associated with a natural resource discovery, it can occur from any development that results in a large.
The experts have observed that oil revenue has replaced government’s budgetary allocation to agriculture and other sectors instead of being a supplement. So a country rich in some natural resources would be better off specializing in the extraction of those natural resources.
The high output of oil and gas can lead to substantial tax revenues for the government. The government has the ability to run a budget surplus and spend more on public services, such as infrastructure and education. But the government will often cut other taxes and come to rely on oil tax revenues. This is as result of increases in fuel prices in Ghana these days; the taxes on oil and gas are too much.
If a country discovers substantial amounts of oil, gas or another natural commodity, it will begin to export these goods causing a substantial increase in GDP; this will improve tax revenues, improve the current account and create employment opportunities. But often countries who discovered oil have gained much less than you might expect.
As Ghana enters the oil and gas era there are high expectations about the exploitation of oil may provide for the rest of the economy. It provides some fiscal space while offering the resources and opportunity to address some of the structural constraints to investment and our development. In 2 007 Ghana discovered the largest quantity of oil of any West African economy in the offshore Jubilee oil field. But Finding natural resources increases corruption and this is one of the reasons for the resource curse in Ghana. This has brought about not concentrating on other natural resources (Dutch Disease).
The experts have observed that oil revenue has replaced government’s budgetary allocation to agriculture and other sectors instead of being a supplement. So a country rich in some natural resources would be better off specializing in the extraction of those natural resources.
The high output of oil and gas can lead to substantial tax revenues for the government. The government has the ability to run a budget surplus and spend more on public services, such as infrastructure and education. But the government will often cut other taxes and come to rely on oil tax revenues. This is as result of increases in fuel prices in Ghana these days; the taxes on oil and gas are too much.
If a country discovers substantial amounts of oil, gas or another natural commodity, it will begin to export these goods causing a substantial increase in GDP; this will improve tax revenues, improve the current account and create employment opportunities. But often countries who discovered oil have gained much less than you might expect.
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