Crude oil is known to have an impact on people’s life of both producers and consumers of crude oil countries. A producer country’s socio-political impact will be different from a consumer country’s socio-political impact. This paper aims to show that crude oil price has a socio-political impact on global countries through descriptive analysis. The study found that there were similarities in the movement of crude oil price and change in GDP of both India and United States and further Russia and Venezuela have had crude oil impact on their respective GDP’s, which has made them take policy reforms. The paper identifies changes in the policy framework due to influence of crude oil price and eventual changes in existing socio-political environment. Taking oil producing countries such as Russia and Venezuela as examples, this paper suggests that policy reforms are the key to having a stable socio-political environment. Russia shows us that having a flexible monetary policy can keep the budget dependence on crude oil reduced in the short term. On the other hand, for oil consuming countries, having a stable supply and moving to new energy sources is the key to tackle the influence of crude oil price on the socio-political environment of global countries.
This research investigates the impact of crude oil price and government effectiveness on control of corruption measures in the oil abundant countries. By using a panel dataset of 18 oil‐producing countries from 2002 to 2017, and panel data regressions, the paper finds that crude oil price and government effectiveness can significantly decrease corruption in the oil‐producing countries. Besides, the findings show that crude oil prices with weaker governments can significantly increase corruption in oil‐producing countries. The results imply that crude oil prices with the institutions that control private investments, public funds, and public employment can significantly determine corruption in the oil abundant countries. In addition, the findings also substantiate rent‐seeking and patronage behaviors in the governments of oil abundant countries. The findings suggest that oil abundant countries must move further from rent‐seeking and patronage motives by promoting private investments in the non‐oil sectors, and create independent public services to reduce corruption. The paper suggests that the reforms should be pressured from international communities and policymakers to reduce corruption in oil abundant states.
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