The resource curse paradox: The role of financial inclusion in mitigating the adverse effect of natural resource rent on economic growth in Ghana

Abstract

Over the last decades, “the resource curse paradox” has received ample attention in the literature. Many studies in the literature have demonstrated that developing countries rich in abundant natural resources have experienced a slower rate of economic growth. However, none of the existing studies, to the best of our knowledge, explore whether financial inclusion can help to resolve this paradox. In this study, we attempt to do this using Ghana as a case study. We applied the fully modified ordinary least square (FM-OLS) to historical data for Ghana covering the period of 1970–2020. Our results show that financial inclusion does help in averting the “resource curse paradox” in Ghana. Our results highlight that increased financial knowledge, availability, and usage of financial services can help to thwart “the resource curse paradox” in resource-rich developing countries. Therefore, policymakers should pay attention to these factors when devising policies to avert the “resource curse paradox” in developing countries rich in abundant resources.