Asymmetrical effect of oil and gas resource rent on economic growth: Empirical evidence from Ghana

Figures & data

Table 1. Brief description of variables

Variable	Description	Expected Effect
Oil resource rent (OR)	Oil rent is measured as average difference between the monetary value/price of crude oil production on the world market and cost of producing oil multiplied by the total volume of oil produced domestically (World-Bank, 2019). Simply put, oil resource rent is the difference between revenue earned from oil production less total cost of extracting the oil from nature. Based on this measurement, oil resource extraction can generate revenue or cost depending on cost of production and price of oil on the world market. Revenue generated out of oil resource extraction is shared among the resource extracting firm, shareholders and government based on legal agreement/contract.	?
Gas resource rent (GR)	The study defines gas resource rent as the difference between the monetary value/price of natural gas production at world market and total costs of producing gas domestically (World-Bank, 2019). Thus, gas resource rent is the average difference between the revenue/income earned from gas production and cost of producing total volume of gas. Natural gas extraction can generate revenue or cost depending on cost of production and price of natural gas on the world market. Revenue generated out of natural gas extraction is shared among, shareholders, government and the firm extracting the gas resource based on legal agreement/contract.	?
Foreign direct investment (FDI)	FDI is a category of cross border investment made by non-resident (foreigners) in an economy. Alternatively, it is defined as investment made by investors or individual into business interests area in another country.	Positive
Lending rate (LR)	Lending rate is the rate at which financial organizations and banks charge for giving out money to individuals, firms and small-scale enterprises. In Ghana, the average lending rate is determined by commercial banks. Hence, the commercial banks monthly base rate in Ghana was used as a proxy for the market lending rate.	Negative
Economic growth (GDP)	This consists of consumer spending, investments, expenditure by the government and exports less imports adjust for inflation. Alternatively, it is defined as the total amount of goods and services produced in an economy in a given period of time, usually a year (Buabeng et al., 2021).
Exchange rate(EXR)	This can be expressed as the rate at which one country’s currency can be traded for another country’s currency. It is the price of a country’s currency in terms of another country’s currency.	Negative

Table 2. Descriptive statistics of the variables

Variable	Observation	Mean	Std. Dev.	Min.	Max.
LnGDP	108	5.3417	2.5683	0.0128	14.0471
LnOR	108	1.9529	1.8990	1.0128	5.6721
LnGR	108	1.0042	0.0123	1.9637	4.0853
LnFDI	108	4.2182	3.2269	0.2513	9.5170
LnLR	108	10.6339	2.0620	0.2513	15.3081
LnEXR	108	1.1366	1.2193	2.9246	7.0694

Source: Author’s elaboration based on World Bank and Bank of Ghana data. The table report standard deviation, mean, maximum and minimum values of all the variables used. The observations are monthly time series data spanning from 2010 to 2019. Std.Dev, Min. and Max. represent standard deviation, minimum and maximum respectively.

Table 3. Pearson correlation coefficient estimates of the main variables

	lnGDP	lnOR	lnGR
lnGDP	1
lnOR	0.765***	1
lnGR	−0.712***	0.001	1

Note: ***, **, and * implies correlation between the variables is significance at 1% (2 tailed), 5% (2 tailed) and 10% (two tailed) respectively.

Table 4. Unit root estimates for both the (ADF) and (P-P) test

	ADF test with intercept				PP test with intercept
Variables	Level	1^st difference	I(d)	Level	1^st difference	I(d)
lnGDP	−4.0766**	−6.574***	I(0)	−3.611*	−6.562***	I(0)
lnOR	0.687	−4.117**	I(1)	−1.155	−4.185**	I(1)
lnGR	−5.606**	−3.005*	I(0)	−5.111**	−2.423*	I(0)
lnFDI	−0.648	−4.342***	I(1)	−0.581	−4.315**	I(1)
LnLR	−3.717**	−3.349**	I(0)	−3.586**	−7.301***	I(0)
lnEXR	−4.349**	−4.349**	I(1)	−1.556	−3.943**	I(1)

Source: Authors elaboration based WDI and Bank of Ghana data. Augmented Dickey Fuller and Philip-Perron (PP) tests results for all the variables used in our analysis. Note: ***, **, and * represent significance at 1%, 5% and 10% respectively.

Table 5. Bounds test estimates

Dependent variables	F-statistics		K = 5
FGDP(GDP|OR, GR,FDI,LR,EXR)	9.74839
Critical Value		Lower bound		Upper bound
1%		2.11		3.01
5%		2.39		3.38

Source: Authors elaboration-based WDI and Bank of Ghana data. ARDL bound test results where K denotes the number of regressors in the equation. Lower and upper-bound critical values were obtained from Pesaran et al. (2001)

Table 6. Long-run estimations using the NARDL

Variable	Coefficient	Std. Error	T-Statistic
$lnO{R}^{+}$	0.2620***	0.0490	5.3469
$lnO{R}^{-}$	−0.4330	0.5410	−0.8004
$lnG{R}^{+}$	0.2428	0.0619	3.9224
$lnG{R}^{-}$	−0.5470**	0.0956	−5.7217
$lnG{R}^{-}$	−0.3142**	0.0561	−5.6107
$lnFDI$	0.2459**	0.0738	3.3319
$lnLR$	−0.3661***	0.0867	−4.2226
Constant	1.2860***	0.2442	5.2657

Note: The dependent variable is gross domestic product (GDP) and the variables of interest are oil resource rent (OR) and gas resource rent (GR). Our control variables include exchange rate, foreign direct investment and lending rate. $lnO{R}^{+}$ represents revenue made out of oil resource extraction while $O{R}^{-}$ denotes incurring cost/losses out of oil resource extraction. The symbols for gas resource rent ($lnG{R}^{+}$and $lnG{R}^{-}$) are interpreted in the same manner. *** represents significant levels 1%, ** represents 5% and * represent 10% level of significance.

Table 7. Estimated short-run results

Variable	Coefficient	Std. Error	T-Statistic
$lnO{R}^{+}$	0.3945**	0.0550	7.1727
$lnO{R}^{-}$	−0.2965	0.0669	−4.4319
$lnG{R}^{+}$	−0.5565	0.0559	−9.9553
$lnG{R}^{-}$	0.4488**	0.0641	7.0015
$lnEXR$	−0.4100***	0.0719	−5.7024
$lnFDI$	0.1608***	0.0199	8.0804
$lnLR$	−0.3169***	0.0498	−6.3634
ECM (−1)	−0.4943 ***	0.0718	−6.8844
R-square	0.8938
Adjusted R-square	0.6693
Durbin-Waston test	3.0289
F-statistic	6.7175
Prob (F-statistics)	0.0013

Note: The dependent variable is gross domestic product (GDP) and the variables of interest are oil resource rent (OR) and gas resource rent (GR). Our control variables include exchange rate, foreign direct investment and lending rate.$\hspace{0.17em}lnO{R}^{+}$ represents revenue made out of oil resource extraction while $O{R}^{-}$ denotes incurring cost/losses out of oil resource extraction. The symbols for gas resource rent ($lnG{R}^{+}$and$\hspace{0.17em}lnG{R}^{-}$) are interpreted in the same manner. *** and ** represent significance at 1 and 5%, respectively.

Figure 1. Plots of CUSUM and CUSUMQ

Table 8. Model diagnostic and reliability test results

Diagnostic test	Test statistics	Prob. value
Normality	0.1330	0.5880
Serial correlation	1.0394	0.3969
Heteroskedasticity	1.7095	0.1950
Functional form	0.4897	0.825
CUSUM	Stable
CUSUMQ	Stable

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Buabeng, E., Adabor, O., & Nana-Amankwaah, E. 2021. Understanding the impact of commercial banks lending rate on economic growth: An empirical evidence from Ghana. Research Square.

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Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. https://doi.org/10.1002/jae.616

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