Oil and Democracy: Endogenous Natural Resources and the Political “Resource Curse”

2016 ◽  
Vol 70 (2) ◽  
pp. 279-311 ◽  
Author(s):  
Sarah M. Brooks ◽  
Marcus J. Kurtz
Keyword(s):  
Natural Resource ◽  
Resource Curse ◽  
Political Regime ◽  
Democratic Development ◽  
Resource Rents ◽  
Oil Revenue ◽  
History Of ◽  
Quantitative Results ◽  
Oil Wealth ◽  
The Relationship

AbstractBy the end of the twentieth century, a scholarly consensus emerged around the idea that oil fuels authoritarianism and slow growth. The natural abundance once thought to be a blessing was unconditionally, and then later only conditionally, a curse for political and economic development. We re-examine the relationship between oil wealth and political regimes, challenging the conventional wisdom that such natural resource rents lead to authoritarian outcomes. We contend that most efforts to examine the causal linkages between natural resource abundance and political regime have been complicated by the likelihood that both democracy and oil revenue are endogenous to the industrialization processes itself, particularly in its developmentalist form. Our quantitative results, based on an analysis of global data from 1970 to 2006, show that both resource endogeneity and several mechanisms of intraregional regime diffusion are powerful determinants of democratic outcomes. Qualitative evidence from the history of industrialization in Latin America yields support for our proposed causal claim. Oil wealth is not necessarily a curse and may even be a blessing with respect to democratic development.

scholarly journals Natural Resources and Civil Conflict: The Role of Military Expenditures

2021 ◽  
Vol 14 (12) ◽  
pp. 575
Author(s):  
Rabah Arezki ◽  
Markus Brueckner
Keyword(s):  
Natural Resources ◽  
Natural Resource ◽  
Resource Curse ◽  
Civil Conflict ◽  
Resource Rents ◽  
Important Message ◽  
Military Expenditures ◽  
Natural Resource Rents ◽  
The Relationship

Military expenditures significantly affect the relationship between the risk of civil conflict outbreak and natural resources. We show that a significant positive effect of natural resource rents on the risk of civil conflict outbreak is limited to countries with low military expenditures. In countries with high military expenditures, there is no significant effect of natural resource rents on civil conflict onset. An important message is thus that a conflict resource curse is absent in countries with sufficiently large military expenditures.

No taxation, no representation: An investigation of the relationship between natural resources and fiscal decentralization

2018 ◽  
Vol 36 (7) ◽  
pp. 1234-1255
Author(s):  
Mohammad Arzaghi ◽  
Andrew Balthrop
Keyword(s):  
Natural Resources ◽  
Natural Resource ◽  
Local Governments ◽  
Central Government ◽  
Fiscal Decentralization ◽  
Government Expenditures ◽  
Government Control ◽  
Resource Rents ◽  
Natural Resource Rents ◽  
The Relationship

Rents from natural resources can alter the relationship between central and local governments by providing a new source of government financing. We develop a model to explore the relationship between fiscal decentralization and resource abundance. Our model indicates that natural resource rents can detach central government expenditures from the tax base so that the central government can spend more to persuade a fractious periphery to remain under central government control. Thus, other things being equal, higher natural resource rents can result in less decentralized government expenditures. We empirically explore the relationship between fiscal decentralization and natural resource rents using a panel of 60 countries over the past 40 years. Empirical results support our economic model: A 1% increase in natural resource rents as a fraction of gross domestic product results in government expenditures that are 0.53% less decentralized.

When Memory Challenges History: Public Contestation of the Past in Post-Suharto Indonesia

2000 ◽  
Vol 28 (2) ◽  
pp. 35-57 ◽  
Author(s):  
Keyword(s):  
The Other ◽  
Political Prisoners ◽  
Political Regime ◽  
The Past ◽  
Other Hand ◽  
Army Officers ◽  
Current Controversy ◽  
Official History ◽  
History Of ◽  
The Relationship

AbstractServing to legitimate the power of a political regime, official history is usually radically questioned as the regime collapses. Such is the case in Indonesia since the fall of Suharto in May 1998. Yet, unlike many other countries which have experienced transitions from authoritarian or totalitarian rule to democracy, post-Suharto Indonesia is witnessing an ambivalent critique of the official history, especially regarding the "September 30, 1965 affair" (the killing of six top Army officers by a regiment of Presidential guards which brought about Suharto's rise to power). On one hand, there is a public query over who masterminded the killings; on the other hand, there are reactionary responses towards the claims of victimization among ex-political prisoners associated with the September 30,1965 movement, as they articulate their experiences of the past tragedy. This paper attempts to explore the current controversy surrounding the official history of the September 30, 1965 affair through discussions of the paradox of memory, and the relationship between memory and history.

Conditioning the “Resource Curse”: Globalization, Human Capital, and Growth in Oil-Rich Nations

2011 ◽  
Vol 44 (6) ◽  
pp. 747-770 ◽  
Author(s):  
Marcus J. Kurtz ◽  
Sarah M. Brooks
Keyword(s):  
Human Capital ◽  
Economic Integration ◽  
Natural Resource ◽  
Resource Curse ◽  
Capital Formation ◽  
Human Capital Formation ◽  
Economic Sectors ◽  
Resource Wealth ◽  
Oil Wealth ◽  
Natural Resource Wealth

Since the 1990s it has become conventional wisdom that an abundance of natural resources, most notably oil, is very likely to become a developmental “curse.” Recent scholarship, however, has begun to call into question this apparent consensus, drawing attention to the situations in which quite the opposite result appears to hold, namely, where resources become a developmental “blessing.” Research in this vein focuses predominantly on the domestic political and economic institutions that condition the growth effects of natural resource wealth. Less attention, however, has been paid to whether or how the context of economic integration has conditioned the domestic political economy of natural resource development. This article specifically addresses this theoretical disjuncture by arguing first that the developmental consequences of oil wealth are strongly conditioned by domestic human capital resources, which, where sizeable, make possible the management of resources in ways that encourage the absorption of technology and development of valuable new economic sectors. In the absence of robust human capital formation, however, the archetypal “resource curse” is likely to result. The authors argue moreover that international economic integration further amplifies the divergence between these outcomes by simultaneously raising the growth-enhancing effects of large stocks of human capital and by directly facilitating economic growth. Analysis of global data on growth and oil abundance (1979-2007) supports their main hypotheses that natural resource wealth can be either a “curse” or a “blessing” and that the distinction is conditioned by domestic and international factors, both amenable to change through public policy, namely, human capital formation and economic openness.

scholarly journals Short-term effects of national-level natural resource rents on life expectancy: A cross-country panel data analysis

PLoS ONE ◽  
2021 ◽  
Vol 16 (5) ◽  
pp. e0252336
Author(s):  
Isaac Lyatuu ◽  
Georg Loss ◽  
Andrea Farnham ◽  
Mirko S. Winkler ◽  
Günther Fink
Keyword(s):  
Economic Growth ◽  
Life Expectancy ◽  
Natural Resources ◽  
Population Health ◽  
Natural Resource ◽  
Short Term ◽  
Resource Rents ◽  
Natural Resource Rents ◽  
Cross Country ◽  
The Relationship

While a substantial amount of literature addresses the relationship between natural resources and economic growth, relatively little is known regarding the relationship between natural resource endowment and health at the population level. We construct a 5-year cross-country panel to assess the impact of natural resource rents on changes in life expectancy at birth as a proxy indicator for population health during the period 1970–2015. To estimate the causal effects of interest, we use global commodity prices as instrumental variables for natural resource rent incomes in two-stage-least squares regressions. Controlling for country and year fixed effects, we show that each standard deviation increase in resource rents results in life expectancy increase of 6.72% (CI: 2.01%, 11.44%). This corresponds to approximately one additional year of life expectancy gained over five years. We find a larger positive effect of rents on life expectancy in sub-Saharan Africa (SSA) compared to other world regions. We do not find short-term effects of rents on economic growth, but show that increases in resource rents result in sizeable increases in government revenues in the short run, which likely translate into increased spending across government sectors. This suggests that natural resources can help governments finance health and other development-oriented programs needed to improve population health.

scholarly journals The Political Economy of the Resource Curse: A Development Perspective

2021 ◽  
Vol 13 (1) ◽  
Author(s):  
Antonio Savoia ◽  
Kunal Sen
Keyword(s):  
Natural Resource ◽  
Political Institutions ◽  
Resource Curse ◽  
Annual Review ◽  
Publication Date ◽  
Developmental Effects ◽  
Resource Rents ◽  
Development Goals ◽  
Development Outcomes ◽  
Resource Sector

This article reviews the recent literature on the developmental effects of resource abundance, assessing likely effects and channels with respect to key development outcomes. To date, this area has received less analysis, although it is relevant to the United Nations’ Sustainable Development Goals agenda, as a significant number of the world's poor live in African resource-rich economies. We argue that the presence of a natural resource sector per se does not necessarily translate into worse development outcomes. The natural resource experience varies to a significant extent. Countries with similar levels of resource rents can end up with significantly different achievements in terms of income inequality, poverty, education, and health. The challenge is to explain the different natural resource experiences. A pivotal mechanism behind the developmental effects of the natural resources sector is the type of states and political institutions that resource-abundant economies develop. Expected final online publication date for the Annual Review of Resource Economics, Volume 13 is October 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

Corruption and banking soundness: Does natural resource dependency matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hamid Kordbacheh ◽  
Seyedeh Zahra Sadati
Keyword(s):  
Natural Resources ◽  
Natural Resource ◽  
Resource Curse ◽  
Banking System ◽  
Destructive Effect ◽  
Data Set ◽  
Content Type ◽  
Factors Affecting ◽  
Resource Rents ◽  
Almost All

Purpose The natural resources curse theory argues the higher dependency on natural resources leads to many socio-economic problems. The purpose of this study is to examine the relationship between corruption and banking soundness and also to compare the extent of this effect between the two groups of rich and poor in natural resources countries. Design/methodology/approach To this aim, the authors apply a panel data set comprised of 98 countries from 2012 to 2015. Findings The results show that nations with a higher level of corruption have poorer banking soundness. The authors also find that by considering the resource curse theory and the effect of natural resource rents in the model, the adverse impact of corruption on banking soundness is more substantial in countries with a higher natural dependency level (rich in natural resources). Originality/value Though studies have been conducted on corruption and banking soundness, this paper, by using resources curse theory, articulates that corruption is one of the most critical factors affecting banking soundness and has a destructive effect on the health of the banking system and the economy of almost all countries, especially in natural resource-based economies. This study will appeal to banks authorities, governments, policymakers, oversight financial institutions and those who have a vested interest in regulating financial crimes globally. They can prevent financial and banking crises by cooperating in the fight against corruption worldwide.

A Theoretical Framework on the Resource Industry: From the Value of Resource in Economy

2014 ◽  
Vol 672-674 ◽  
pp. 2059-2064
Author(s):  
Meng Xia Zeng ◽  
Min Xue Gao
Keyword(s):  
Natural Resource ◽  
Theoretical Study ◽  
Empirical Studies ◽  
Resource Curse ◽  
Theoretical Framework ◽  
Analysis And Evaluation ◽  
Starting Point ◽  
Resource Industry ◽  
Attributive Adjective ◽  
The Relationship

For researches on the relation between natural resource and economy, the concept of (natural) resource industry is a crucial element. However there is scarcely any theoretical study on the connotation and denotation of resource industry. We hold that the characteristics of resource industry stem from its attributive adjective – (natural) resource, which should be deeply analyzed in order to learn the appropriate meaning of resource industry. On this account, we focus on the theoretical framework of resource industry, by taking the concept of natural resource value as a starting point, and then presenting two definitions of resource industry to meet the different requirements of relative researches. This paper would lay the foundations for the analysis and evaluation of resource industry economy, and establish a more explicit perspective for the empirical studies of the relationship between resource and economy, such as the validation of Natural Resource Curse Hypothesis.

scholarly journals Testing the Existence of Natural Resource Curse in Indonesia: The Role of Financial Development

2021 ◽  
Vol 22 (2) ◽  
pp. 213-227
Author(s):  
Sedwivia Ridena ◽  
Nurarifin Nurarifin ◽  
Wawan Hermawan ◽  
Ahmad Komarulzaman
Keyword(s):  
Natural Resources ◽  
Financial Development ◽  
Natural Resource ◽  
Generalized Method Of Moments ◽  
Resource Curse ◽  
Natural Resource Curse ◽  
Economic Output ◽  
Negative Effect ◽  
The Relationship

Natural resources may become a blessing that can contribute to societies’ welfare increases. Yet natural resource abundance could also become a curse for countries’ economic development. Numerous studies have investigated the relationship between natural resources and economic performance. However, the results remain ambiguous and have no consensus in the literature. In specific, most literature focused only on testing the curse’s existence, while studies that involve the role of financial development in mediating the nexus remain scarce. To the best of our knowledge, this is a pioneer study in a developing country endowed by natural resources. Using panel data of 33 provinces from 2012 to 2018, this study implements the Generalized Method of Moments (GMM) technique to examine the existence of the natural resource curse and scrutinize the role of financial development in mitigating the curse. Results show that Indonesia potentially experiences a natural resource curse. Nonetheless, the negative effect of natural resources on economic growth could be mitigated by enhancing the role of financial development to reach a certain threshold over economic output. This study recommends policymakers to not only increase financial development across the provinces but also pay more serious attention to other factors causing the natural resource curse in Indonesia.

scholarly journals Economic aspects of indexing democracy

2021 ◽  
pp. 7-32
Author(s):  
Marharyta Chabanna ◽  
Keyword(s):  
Economic Development ◽  
Gross Domestic Product ◽  
Market Economy ◽  
The Other ◽  
Domestic Product ◽  
Political Regime ◽  
Economic Aspects ◽  
Development Indicators ◽  
Democratic Development ◽  
The Relationship

Indices of democratic development are the important issue of contemporary political studies. Their calculation allows to rank countries by a set of parameters and, accordingly, to assess trends in political changes. In this context, some authors pay attention to the indicators of development of national economies. In general, when it comes to determining the type of political regime, it is necessary to consider the various dimensions (e. g. institutional, socio-cultural). To avoid conclusions based on incomplete information and focus on separate – institutional, cultural, or economic – aspects, it is necessary to use an interdisciplinary approach, which, in addition, allows to consider the maximum number of factors of sustainability of democratic trends. Considering the scholarly debate over the interdependence of political and economic development, the paper compares the indices of democracy with economic development estimates, as well as the Gross domestic product of the countries selected for consideration. Quantitative data were analyzed with the calculation of the corresponding correlation coefficients. Initially, the author identified the relationship between indicators of democratic development to obtain confirmation of the feasibility of further comparison. As the obtained coefficients for the selected group of countries are reliable, the methodology applied to the considered countries is valid for application for other regions for which the listed research institutions carry out evaluations. This allowed the use of democratic development indicators to compare them with assessments of market economy development. Accordingly, there is a correlation between democratic and economic development – indicators of democracy status, democracy index and ranking of countries on the democracy scale on the one hand, and the index of economic freedom, market economy status, indicators of institutional ranking of economic freedoms – one the other. Moreover, it is emphasized that theoretical generalizations about the relationship between democracy / democratization and the level of economic development should take into account not only the correlation between expert assessments, but also the relationship between democratization and GDP. On the other hand – such a relationship is nonlinear, and the conditions of democracy, external and internal factors, as well as the national context are significant. Key words: democracy, political regime, economic development, modernization theory, Gross domestic product.

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