Oil, Isolation, and Institutions: Rethinking Globalisation in Petroleum-Exporting States
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Abstract
Economic globalization and political globalization are generally understood to be mutually reinforcing processes. Countries that are deeply integrated into the global economy through trade, finance, and labor mobility typically possess strong incentives to participate in international institutions, treaty regimes, and multilateral frameworks that stabilize cross-border economic interactions. Political globalization, in turn, enhances economic globalization by reassuring investors and trade partners through commitments to international norms and regulatory cooperation. However, this conventional relationship does not hold uniformly, particularly in the case of oil-exporting countries.
Despite being highly integrated into the global economy and exerting disproportionate influence due to global dependence on petroleum imports, many oil-exporting states exhibit relatively low levels of political globalization. These countries often show limited participation in intergovernmental organizations, weak commitment to human rights treaties, reluctance to accept binding arbitration, and minimal safeguards for foreign investors’ property rights. This phenomenon gives rise to what can be described as unbalanced globalization, characterized by high economic integration alongside political isolation.
The paper argues that oil wealth weakens the traditional incentives that encourage political globalization, particularly the need to attract foreign investment and secure access to international markets through institutional commitments. While oil-exporting countries do engage selectively in international cooperation, they often prefer ad hoc arrangements over binding governance structures. The analysis further explores the role of OPEC, its diverse behavioral models, and the macroeconomic feedback mechanisms linking oil prices, global growth expectations, and policy responses. By examining historical oil shocks, price volatility, and recent market dynamics, the study highlights how oil-dependent economies shape—and are shaped by—global economic and political structures.
The findings suggest that unbalanced globalization poses normative concerns for policymakers, as limited political integration may undermine long-term stability, compliance with international law, and effective global governance, despite short-term economic advantages derived from resource wealth.
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References
We use the terms ‘oil’ ‘petroleum’ and ‘fuels’ interchangeably to refer to both oil and natural gas.
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