Effects of petroleum revenue on economic growth in Ghana

Abstract

The use of natural resources for economic growth is one of the most important goals for many countries. Despite the fact that there are numerous factors that influence economic growth, the focus of this study is solely on petroleum revenue and its effects on economic growth. Explanatory design was employed in this study to explain the relationship between petroleum revenue and economic growth in Ghana. The approach used for this study was Quantitative using Time series ARDL model with eleven (11) years quarterly data from 2011 to 2021 was used. The results indicates that Annual Budget Funding Amount (ABFA), Stabilisation Fund, and Petroleum Revenue had a positive and significant impact on economic growth in a long run. However, only ABFA had a positive and significant impact on economic growth in a short run. It can be concluded that, the resilience of the macro economy can promote the desirable implications of total petroleum revenues on economic growth. Hence, inflation, exchange rate, labor, and provision of capital was found to be cointegrated with petroleum revenues and economic growth. There is the need for government revenue on capital spending from the ABFA to be increased since ABFA contributed positively in the long run than the short run.