Explain the three effects of over-dependence of petroleum on the economy of oil importing countries.

Explain the three effects of over-dependence of petroleum on the economy of oil importing countries. (6 marks)

Higher expenditure/foreign exchange/ spends more on importation
Higher production costs/hence higher prices of manufactured goods
Closure of industries which are not able to meet the increased cost of production coupled with increase in transport cost
Slowed industrial growth as most industries depend on petroleum
Economic recession in these countries as oil is necessary for all sectors of production