Economy Barriers to E-government Diffusion in Developing Oil Exporting Countries


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Research has for  a long consistently shown that overdependence of the natural resource tends to be critically associated with lower growth of economies of such countries. However, the consideration of  this hypothesis  there no crucial  difference in countries that  greatly  depend on oil exportation especially the OPEC countries. Therefore, as a result of this universality among the oil producing and exporting countries it becomes necessary to re-evaluate the reasons why such a phenomenon is experienced. Moreover, previous  studies on this field indicates that there is a clear evidence linking the oil resource  exportation-dependent countries with slow economic growth even after various factors are controlled (Awokuse & Clifton, 1994).

In addition,  the oil exportation dependency provides a barrier  to  the E-government since countries that heavily depend on the exportation of natural resource such as the oil have over a long time poorly performed on various economic and social measures  as well as  political development leading to a phenomenon often referred to as the resources curse. This has been due to numerous conflicts that hinders implementation of effective economic policies (Sturm, Gurtner & Gonzalez, 2009). However, irrespective of this the oil natural resources are likely to be the ultimate road to development in most of the oil producing countries. Hence, this necessitates for  the embracing of sound economic policies and good governance which are the crucial variable that can be used in mitigating these effects (Jones, 1990).

Rapid growth in domestic consumption of oil among OPEC countries

The export rate are nowadays reducing  among the OPEC countries due to increased levels of consumption in comparison to previously. For instance, most of  the OPEC member countries usually  survive on the revenues obtained from oil exportation which in most cases results  to the eroding of the exportation capacities as a result of domestic consumption subsidization. The OPEC oil producers and exporters have approximately generated an  estimated $5 trillion in oil-exportation revenue since the year 1998 which is a very sizeable  amount of money. However, this money is usually not adequately accounted for or reflected  in the  levels of domestic development among the OPEC countries (Cremer & Isfahani, 1991).

Therefore, irrespective of ensuring that the OPEC member countries citizens are weaned off the subsidies allocated on the oil, it is likely that the OPEC organization will reach a point whereby  it will not be able to increase  the oil price of oil without directly or indirectly harming its oil exportation revenues (World Bank, 1992). However, for the time been that barrier is actually some way off, but likely to cause the effects soon, therefore OPEC should take heed in advance. This is mainly because the subsidies  are likely to  continue increasing with the increase in the levels of consumption among these countries (Sturm, Gurtner & Gonzalez, 2009). Moreover, this rapid growth in the domestic consumption of oil has greatly lowered the rates of export rates in most of the OPEC countries. Thus, as the average of global growth of oil demand average 1.2% per year, the demand in many OPEC countries grew by  almost  double the global  rate a trend that  can be  accounted by the heavy subsidization  which  is  effected through low retail prices within the OPEC countries. For instance, the demand in Angola, Qatar, and the UAE grew by more than 5% per year, closely  followed by Kuwait, the  and Saudi Arabia whom their growth rate was 4.7% per year (OPEC Annual statistical bulletin, 2010). This is a trend  which  must be addressed to ensure that there is likelihood of exhaustion of the oil resources.



Oil exportation statistics among the OPEC countries

The OPEC member countries annual revenue approximately totalled $103 billion in the year 1998 and has been consistently growing over the up to 2008 when the export  values  dropped  due  to global economic  financial crisis. However, under normal  circumstances  the oil export rates increases exponentially to cater for the increasing demand worldwide. However among the OPEC member countries Saudi Arabia happens to be the largest export  with the least one been Ecuador (OPEC Annual statistical bulletin, 2010). Hence, Saudi Arabia is always a very key stake holder in the determination of the global oil prices. However, the statistics provided below that were adopted  from the OPEC Annual statistical bulletin for five years indicates a continuous increase within the four years except 2009 which was hardly hit by global financial crisis.

Table 1: OPEC Member countries values of petroleum exports in million dollars

  2005 2006 2007 2008 2009
Algeria 32,757 38,293 44,250 53,607 30,587
Angola 22,101 29,131 42,132 69,364 38,813
Ecuador 5,870 7, 545 8,329 11,613 6,965
IR Iran 53,219 59,131 64,901 88,660 55,604
Iraq 23,648 30,465 39,433 56,843 41,852
Kuwait 42,440 53,188 59,001 82,682 46,569
SP Libyan AJ 28,300 35,700 40,400 54,175 31,377
Nigeria 49,722 54,607 51,170 74,033 26,471
Qatar 17,585 23,350 29,130 38,950 26,840
Saudi Arabia 161,871 190,468 205,452 280,998 157,407
UAE 55,079 70,100 73,816 102,073 58,656
Venezuela 39,117 47,795 51,664 89,128 54,201
TOTAL 531,709 639,772 709,678 1,002,186 575,341


Fiscal policy among the OPEC countries

Fiscal policy choices that have been pursued by the OPEC countries have significant impact on economic performance in these countries. This is mainly due  to the fact that the oil sector importance in the economy as well as because in most OPEC countries the oil revenues are directed to the government (Ezzati, 1978). However, the fiscal policy in most of these oil-centred economies is actually  facing numerous challenges, both in the long run, due to the fiscal sustainability and intergenerational equity as well as in the short run, due to the fiscal planning and macroeconomic stabilisation. Moreover, most of  the institutional responses to particular fiscal challenges among the OPEC countries mostly involves the budget’s  conservative oil price assumptions, the oil stabilization establishment as well as savings funds and the fiscal rules (Awokuse & Clifton, 1994).

In addition, the fiscal policy in most of the OPEC countries has been expansionary for  some time as a result of increasing oil prices (World Bank, 1992). Therefore, the fiscal expansion has greatly added to inflationary pressure, thereby  constraining the monetary policy in tackling inflation due to drastically changing exchange rate regimes. Therefore, from this perspective fiscal policy is actually the major macroeconomic stabilisation tool, however, it has constantly faced competing considerations and objectives (Jones, 1990). Hence, cyclical considerations usually warrant fiscal restraint, but, at times when the oil prices are high, pressure toward increasing public spending mounts. However, such pressures actually stem from the distribution-related considerations, spending needs that are development-related such as in the areas of social and  physical infrastructure as well as international considerations which may include global imbalances (Cremer & Isfahani, 1991). However, the sharp fall in prices of oil from 2008 poses the challenge of whether oil exporters will be able to sustain their spending levels that had been reached in previous years.


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