Oct 1, 2013

Resource curse or resource disease? Oil in Ghana

From a paper by Dominik Kopiński, Andrzej Polus and Wojciech Tycholiz on the resource curse in Ghana
Ghana has recently joined the ranks of oil-producing states with a projected output of 120,000 barrels per day. This has greatly elevated hopes among the general public, but also sparked fears of a ‘Nigerian scenario’ in which oil becomes a problem rather than a solution. This article argues that Ghana, as a latecomer to the oil industry, may possess a structural immunity against the natural resource curse. The argument centres on three main factors: the country's stable political system, its relatively robust and diversified economy, and the strength of civil society. As a result, the usual symptoms linked to oil extraction across the developing world are unlikely to turn the country upside down. Instead, we suggest that the ‘curse’ should be perceived as a treatable ‘disease’. The article pursues this analogy by showing that, since the discovery of oil, Ghana has been strengthening its ‘immune system’ through a new legal framework, improvements in transparency and accountability, and modest attempts to strengthen non-resource sectors of the economy.
I did not find a full draft online, so I can just speculate about the results. The question is why Ghana has become relatively immune? After independence - Ghana was the first African country - Ghana went through a very turbulent period politically and economically. It was not until the early 1980s, after a period of liberalization of markets, when Ghana started a path of stability and sustained economic growth, it was modest but steady. Democracy started to gain traction and that set up the institutions of governance we see today. They are not great, but much better than other countries in the continent. See in the figure below the World Governance Indicator for countries in Africa.
But there are usually historical roots for good governance and in the case of Ghana that remains an enigma, at least for me. Probably the long term roots of governance were stablished during the consolidation of power of the Ashanti, that means going 300 years back in history.   

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