Journal Article

Can Oil-led Growth and Structural Change Go Hand in Hand in Ghana? A Multi-sector Intertemporal General Equilibrium Assessment

Journal of Policy Modeling

Unlike in Asia, the manufacturing sector has not (yet) become a driver of structural change in Africa. One common explanation is that the natural resource-focus of many African economies leads to Dutch disease effects. To test this argument for the case of newly found oil in Ghana we develop a multi-sector intertemporal general equilibrium model with endogenous savings and investment behavior. Results show that in addition to the well-known short-term Dutch disease effects, long-term structural effects can indeed impede Asian-style economic transformation in Ghana (and other resource rich countries). We also demonstrate how oil wealth may go hand in hand with structural change in the future.

Authors

Clemens Breisinger
Xinshen Diao

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Publication Date
JEL Classification
C68, D90, D58, F43, O11, O41, O55