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Since Ghana attained independence in 1957, successive Governments have pursued, with
varying degrees of success, policies, programmes and projects to accelerate the growth of
the Ghanaian economy and raise the living standards of the people. These are policies,
programmes and projects around which national and development partner’s efforts are
coordinated. The discovery and exploration of oil, no doubt has increased Ghana revenue
but this has not fully translated to socio-economic development as expected. The study
therefore, seeks answers to the following questions; Has oil discovery and exploration
accounts for high cost of living in Ghana? Has the discovery and exploration of oil in
Ghana reduce the poverty level in Ghana? This study therefore, critically evaluated the
impact of oil on the national development of Ghana. The study used the Marxist
instrumentalist theory as a theoretical framework of analysis and adopted the secondary
sources of data collection which included books, scholarly journals, pamphlets,
monographs, newspapers, and magazines and governments. The ex-post facto research
design and qualitative descriptive of documented evidence was used as a method of data
analysis. The study affirmed that oil production in Ghana has not improved the economy as
expected, high standard of living and unequal development persist despite foreign earning
from petroleum resources. The study recommended amongst others, government policies
and programmes that integrates the poor and boost economic growth.

1.1 Background to the Study
Ghana’s Economy has left an indelible imprint on the country’s social and political
structures. Just as the presence of gold gave rise to the Asante confederacy and empire and
attracted European traders and colonial rulers.
Endowed with gold and oil palms and situated
between the trans- Saharan trade routes and the African coastline visited by successive
European traders, the area known today as Ghana has been involved in all phases of Africa’s
economic development during the last thousand years. As the economic fortunes of African
societies have waxed and waned, so, too, have Ghana’s, leaving that country in the early
1990s in a state of arrested development, unable to make the “leap” to Africa’s next, as yet
uncertain, phase of economic evolution.
As early as the thirteenth century, present-day Ghana was drawn into long-distance
trade, in large part because of its gold reserves. The trans-Saharan trade, one of the most
wide-ranging trading networks of pre-modern times, involved an exchange of European,
North African, and Saharan commodities southward in exchange for the products of the
African savannahs and forests, including gold, kola nuts, and slaves. Present-day Ghana,
named the Gold Coast by European traders.
When Ghana gained its independence from Britain in 1957, the economy appeared
stable and prosperous. Ghana was the world’s leading producer of cocoa, boasted a welldeveloped infrastructure to service trade, and enjoyed a relatively advanced education
system. At independence, President Kwame Nkrumah sought to use the apparent stability of
the Ghanaian economy as a springboard for economic diversification and expansion. He
began process of moving Ghana from a primarily agricultural economy to a mixed
agricultural-industrial one. Using cocoa revenues as security, Nkrumah took out loans to
establish industries that would produce import substitutes as well as process many of Ghana’s
exports. Nkrumah’s plans were ambitious and grounded in the desire to reduce Ghana’s
vulnerability to world trade. Unfortunately, the price of cocoa collapsed in the mid-1960s,
destroying the fundamental stability of the economy and making it nearly impossible for
Nkrumah to continue his plans. Pervasive corruption exacerbated these problems. In 1966 a
group of military officers overthrew Nkrumah and inherited a nearly bankrupt country.
By the early 1980s, Ghana’s economy was in an advanced state of collapse. Per capita
gross domestic product (GDP) showed negative growth throughout the 1960s and fell by 3.2
per cent per year from 1970 to 1981. Most important was the decline in cocoa production,
which fell by half between the mid-1960s and the late 1970s, drastically reducing Ghana’s
share of the world market from about one-third in the early 1970s to only one-eighth in 1982-
83. At the same time, mineral production fell by 32 per cent; gold production declined by 47
per cent, diamonds by 67 per cent, manganese by 43 per cent, and bauxite by 46 per cent.
Inflation averaged more than 50 per cent a year between 1976 and 1981, hitting 116.5 per
cent in 1981. Real minimum wages dropped from an index of 75 in 1975 to one of 15.4 in

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