Breisinger, Clemens Diao, Xinshen Wiebelt, Manfred
Year of Publication:
Kiel Working Paper 1784
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.