THE CHALLENGES, POTENTIALS, PROSPECTS AND DIVERSIFICATION OPTIONS OF OIL-DEPENDENT ECONOMIES IN THE 21ST CENTURY: A COMPARATIVE ANALYSIS OF NIGERIA AND KAZAKHSTAN

Abstract

The explorations of crude oil in Nigeria and Kazakhstan have resulted in the neglect of other non-oil sectors of the economies and increased overdependence on oil as the sole source of exports and foreign exchange earnings. Over the years, the two countries have been able to survive and foster some level of growth from their reliance on oil revenues. However, given the rate of technological advancement and the discovery of alternative sources of fossil energy, coupled with incessant fall in the global oil price, it is only a matter of time before oil loses its relevance in the global economy. Thus, there is need for diversification of these economies. New and untapped sector needs to be explored, alternative sources of national revenue need to be discovered and invested into in order to enhance future growth and development. This study identifies the impacts of overdependence of these two countries on oil and suggests potential diversification options available to them. The findings of this are that the diversification policies were not successful in the two countries, in spite of the potential displacement of future oil demand. This paper, therefore, concludes that the two economies would still be susceptible to the global oil price.