Efficiency of oil-production: the role of institutional factors

Chygryn Olena (), Oleksii Lyulyov, Pimonenko Tetyana and Mlaabdal Saad
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Chygryn Olena: Sumy State University, Ukraine
Pimonenko Tetyana: Sumy State University, Ukraine
Mlaabdal Saad: Sumy State University, Ukraine

Engineering Management in Production and Services, 2020, vol. 12, issue 4, 92-104

Abstract: The article aims to provide a theoretical basis for the assessment of the institutional impact on oil production. The availability of fuel is the key driver of the functioning national economy, which determines the strategic and tactical landmarks of socioeconomic development and vectors of the country's foreign economic course. Such tendencies are represented in the results of the provided correlation analysis of the fluctuation between oil-production volumes and greenhouse gas emissions, the use of alternative energy sources, the number of patents for oil production, and unemployment. The provided bibliometric analysis, which was made using VOSviewer, has shown the content of interconnections between the categories of oil production and institutional determinants. The authors hypothesised that changes in the institutional environment and their interconnectedness formed a chain “oil production and oil rents → the level of corruption → the efficiency of public governance”. The hypothesis was confirmed by constructing a system of dynamic models and using the Generalised Method of Moments. The calculations confirmed that oil rents were associated with corruption and were a direct threat to the stability of public institutions. An increasing level of corruption was associated with an increase in the level of rent payments and occurred only when the quality of democratic institutions was below the threshold level. The current level of efficiency in public administration did not have a significant impact on national oil production. Of all indicators, only the level of political stability had a statistically significant impact on oil production. The identified interconnections provide the basis for creating an efficient state policy aimed at effectively functioning state institutions, which promote the development of the oil industry, and the reduction of the country's energy dependence as well as strengthen the resilience of the national economy.

Keywords: oil production; corruption; oil rent; corruption; government (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ecoman:v:12:y:2020:i:4:p:92-104:n:2

DOI: 10.2478/emj-2020-0030

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