A Comparative Survey Data Analysis of Declining Oil Revenue Implications on the Economic Performance of Oil-Exporting Countries: Nigeria, Venezuela and Norway

Abstract

The global oil markets have witnessed different episodes of oil price fluctuations at different intervals. The effect of the fluctuations differs across nations and partly depending on the direction of the shocks. Declining oil revenue also has both direct and indirect impact on the economic performance of the countries where the heavy dependency on crude oil prevails. This study is a comparative survey analysis of declining oil revenue implications on the economic performance of oil-exporting countries; the case of highly oil-dependent nations: Nigeria (West Africa), Venezuela (South America) and Norway (Europe). Purposive sampling was used in selecting our samples, while the Survey Monkey cloud-based tool was employed to administer and collect the questionnaires from the targeted audience. Survey data analysis was carried out using SPSS Version 25 and the Survey Monkey platform. The results reveal that both increasing and decreasing oil price affect the oil revenues and the external reserves of Nigeria, Venezuela and Norway proportionately. The outcome also shows that during periods of declining oil revenues, Nigeria and Venezuela attain their budgetary needs through borrowing and seigniorage. On the other hand, Norway utilises its savings with the Sovereign Wealth Fund (SWF) and Pension Funds in financing its fiscal needs, thereby exonerating Norway from the resource curse syndrome. It is recommended that these nations explore other sources of revenue through diversification and the development of other natural resources. Nigeria and Venezuela should also restore security which would help in attracting further foreign investors. They should also ensure effective management of government funds and pay attention to its human capital development. However, an economic model is proposed to aid in closing the revenue gaps in these highly oil-dependent nations, given that the "power of oil" is gradually fizzling out as other alternative forms of energy that are assumed to be environmentally friendly are widely embraced.

An Analysis of Declining Oil Revenue Implications on Oil-Exporting Countries: An ARDL Bound Test Approach for Nigeria and Venezuela.

“…Most oil exporting countries, especially those having oil as their "heart-beat" are facing multiple economic crises in recent times; mainly from the COVID-19 pandemic which has crippled global economic activities and the collapse of the global oil price which shrinks the oil revenue of most of the oil exporters. The present crisis in the global oil market is also driven by the carbon reduction target and high improvement in technology to gradually shift from hydrocarbon-based economies to ones based on a more sustainable form of energy, thereby making renewable energies to be the most preferred energy option due to the low cost of its production [14], [37], [13]. However, this is the very first time in history that the West Texas Intermediate (WTI) crude oil price moved towards negative in April 2020 while the Brent Crude price declined significantly as most of the oil exporting countries are tremendously susceptible to constant volatility in the oil market.…”

“…The Nigerian economy is also facing severe macroeconomic instability due to its over-dependence on oil export, exchange rate depreciation and fiscal imbalances. Nigeria is the only member of OPEC that is still importing fuel in the country because most of the refineries are not functional [14], [15], [36], [32], [1]. Venezuela is one of the most affected nations among its peers as the economy is overwhelmingly dependent on oil revenue for its sustainability.…”

“…The declining oil revenue has indeed led to an increase in foreign debt, an increase in poverty level, and increasing political tension due to the economic instability. The Venezuelan economy is falling apart because the residents now lack access to basic food while the country has laid off many of its oil workers and scrapped multibillion-dollar projects due to lack of funds and resources to finance those projects [14], [68], [69], [51], [42], [62]. The impact of these established factors on oil-exporting economies differs across nations given that some countries can "weather the storm" than others due to their excess savings with the Sovereign Wealth Fund while other nations are having the challenges of increasing public debt, high levels of insecurity and inability to attract foreign investments to propel economic growth.…”