The Impact of Oil Sector on the Economy – Theoretical Review

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The Impact of Oil Sector on the Economy – Theoretical Review

ABSTRACT

Most countries depend on oil. History shows that states will spend a lot of money acquiring the capacity to produce oil or to ensure access to the free flow of oil. The oil sector therefore will always be a key player in the economy of most nations in the world. Clearly, crude oil consumption and exports contribute immensely to the improvement of the economy. There is a symbiotic relationship between oil markets and global economy. The main aim of this article is to illustrate the impact of the oil sector on the global economy and analyses the variables that exists in the oil sector which tend to affect the performance of the oil sector hence affecting the global economy. This article will feature various research studies in the oil sector to explain how variables like politics, corruption, accountability and transparency, structural organization of oil companies, regulations, conflict and economic reforms affect the oil sector. An analysis of the

investment finance between the oil and agriculture industries is highlighted by this article. In this article, the researcher also highlights the impact of the activities of the oil sector on the environment and health aspects of the population of the area in which the activities are located. The socio-economic impacts as well as impacts on the eco-systems are discussed. Furthermore, the researcher points out the impacts that the oil sector has on employment. Lastly, the article demonstrates the role that Corporate Social Responsibility (CSR) in the oil sector plays in the impacts that oil firms have on the socio-economic and environmental aspects alongside the role that it plays in determining the legitimacy of oil firms in the views of investors and the general public.

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