Resource wealth as rent leverage: Rethinking the oil–stability nexus

2015 ◽  
Vol 34 (6) ◽  
pp. 597-617 ◽  
Author(s):  
Benjamin Smith
Keyword(s):  
Resource Curse ◽  
Political Stability ◽  
Civil Conflict ◽  
Political Leaders ◽  
Weak State ◽  
Regime Stability ◽  
Resource Wealth ◽  
Cross Country ◽  
Oil Wealth ◽  
Cross National

The study of the “resource curse” has become a major research agenda with multiple outcomes of interest—regime type, regime stability, civil conflict and economic growth to name a few. However, the proliferation of different measurement choices has hamstrung the quest for knowledge accumulation. In this essay I present a new indicator for oil dependence—a concept I term rent leverage. It captures the share of individuals’ buying power that directly depends on fuel income and that nearly everywhere is controlled by political leaders. I use the new measure alongside fuel income per capita, to capture oil abundance, to explore the effects of oil wealth on political stability. Initial analysis of cross-national data from 1960 to 2009 suggests that rent leverage and fuel income strongly stabilize rulers of all types against regime change and that these effects are largely a function of cross-country differences. The stabilizing effects of oil income are significant but substantially smaller than rent leverage. The analysis further supports recent findings by Ross and Wright et al. that oil income and rent leverage both play stabilizing roles in autocracies, but that this effect is largely a cross-country one. Third, neither rent leverage nor oil income have any substantial or significant impact on civil war onset. Finally, contrary to both the weak state and coercion variants of resource curse theory, oil-producing countries appear to use less repression than others, and to have more durable regimes in part because of stronger states.

Fiscal Institutions and Macroeconomic Management in the United Arab Emirates

2019 ◽  
pp. 356-426
Author(s):  
Raimundo Soto
Keyword(s):  
United Arab Emirates ◽  
Resource Curse ◽  
Political Stability ◽  
Institutional Development ◽  
Business Environment ◽  
Fiscal Rules ◽  
Fiscal Institutions ◽  
Long Run ◽  
Oil Wealth ◽  
Macroeconomic Management

The UAE has seemingly escaped “the natural resource curse”: it is one of the richest countries in the world and ranks comparatively highly on business environment, infrastructure, and institutional development. Symptoms of the curse can nevertheless be found in the very low growth in labor productivity, massive public sector overemployment, and the inability to counteract instability induced by oil price cycles. This chapter shows that fiscal policy is highly ineffective as a countercyclical tool due to the absence of income and ad-valorem taxes. Stabilizing instruments—such as open-budgeting procedures or fiscal rules—are notoriously absent. Why would a country design its fiscal, monetary, and exchange rate policies so that they allow for high levels of pro-cyclicality, thereby hampering efficiency and long-run growth? A political economy explanation is developed whereby weak fiscal institutions are an agreed-upon mechanism to secure political stability and transfer oil wealth among emiratis and to future generations.

Response to Pauline Jones Luong's review of Oil Wealth and the Poverty of Politics: Algeria Compared

2013 ◽  
Vol 11 (2) ◽  
pp. 598-598
Author(s):  
Miriam R. Lowi
Keyword(s):  
Saudi Arabia ◽  
Comparative Analysis ◽  
Middle Eastern ◽  
Resource Curse ◽  
Political Stability ◽  
Rentier State ◽  
Economic Shocks ◽  
Oil Wealth ◽  
Do So

In writing my book, I had two principal and two secondary goals. My principal goals related to Algeria itself: first, to explain the country's peculiar trajectory with political stability and, eventually, its descent into violence, followed by its fascinating restabilization; second, to use the Algerian experience to contribute to the “rentier state” literature and show that oil has not been the “curse” that the “resource curse” folks suggest it to be. My secondary goals had to do with enriching and contextualizing the argument I was making about Algeria. I sought to do so in two ways: by offering “some preliminary comparisons” between Algeria's experience and that of other Middle Eastern oil-exporting states at times of economic shocks, and by cautiously extending the argument about variations in stability in Algeria to account for variations in stability in the four other countries. Four of the five empirical chapters of the book are devoted exclusively to Algeria; a single chapter—what I refer to as “a brief excursion into comparative analysis”—is devoted to Iran, Iraq, Indonesia, and Saudi Arabia and the comparison with Algeria.

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.

Oil and Economy

2005 ◽  
Vol 55 (4) ◽  
pp. 371-402
Author(s):  
András Köves
Keyword(s):  
Structural Changes ◽  
Oil And Gas ◽  
Negative Impact ◽  
Raw Materials ◽  
Resource Curse ◽  
Industrial Sector ◽  
Soviet Period ◽  
Military Industry ◽  
Resource Wealth ◽  
Oil Wealth

Economic literature has recently paid increased attention to the interrelationships between resource (oil) wealth (i.e. dependence on exports of oil and other raw materials) on one hand, and macroeconomic performance (and socio-political system) on the other. Most authors find that resource wealth has a negative impact on economic development, and suggest that resource-oriented countries should diversify their economies. This article reviews some economic-policy dilemmas, and also examines the need for, and the constraints of, structural changes in Russia, an atypical, but quite important resource-dependent country. The negative implications of the “resource curse”are valid in the case of this country, as well. Russia has become resource-oriented despite the priority of heavy (military) industry development during the Soviet period. Although in some fields Soviet manufacturing was extensive and strong, it proved inefficient and internationally non-competitive. Engineering - the largest industrial sector - was never export-oriented. In addition, post-Soviet decline led to significant de-industrialisation. Thus, the present dependence on oil and gas is more a consequence than a cause of the weakness of manufacturing. Government-managed reorientation of resources from raw materials sectors onto manufacturing and services (urged by almost everyone but showing little progress) is a necessary but far not sufficient condition of the economic modernisation.

Lessons from Strange Cases

2008 ◽  
Vol 41 (4-5) ◽  
pp. 477-514 ◽  
Author(s):  
Ellis Goldberg ◽  
Erik Wibbels ◽  
Eric Mvukiyehe
Keyword(s):  
Natural Resource ◽  
Resource Dependence ◽  
Resource Curse ◽  
Negative Association ◽  
Data Set ◽  
Resource Wealth ◽  
Natural Resource Wealth ◽  
Natural Resource Dependence ◽  
Developmental Performance ◽  
Cross National

The work linking natural resource wealth to authoritarianism and under-development suffers from several shortcomings. In this article, the authors outline those shortcomings and address them in a new empirical setting. Using a new data set for the U.S. states spanning 73 years and case studies of Texas and Louisiana, the authors are able to more carefully examine both the diachronic nature and comparative legs of the resource curse hypothesis than previous research has. They provide evidence that natural resource dependence contributes to slower economic growth, poorer developmental performance, and less competitive politics. Using this empirical setting, they also begin parsing the mechanisms that might explain the negative association between resource wealth and political and economic development. They draw implications from intranational findings for resource abundant countries across the world and suggest directions for future cross-national and cross-state work.

Mechanisms of Resource Curse and Economic Policy

2007 ◽  
pp. 4-27 ◽  
Author(s):  
V. Polterovich ◽  
V. Popov ◽  
A. Tonis
Keyword(s):  
Real Exchange Rates ◽  
Resource Curse ◽  
Budget Deficits ◽  
Resource Abundance ◽  
Fuel Prices ◽  
Use Of Resources ◽  
Resource Wealth ◽  
The One ◽  
The Right ◽  
Rich Countries

This paper compares various mechanisms of resource curse leading to a potentially inefficient use of resources; it is demonstrated that each of these mechanisms is associated with market imperfections and can be "corrected" with appropriate government policies. Empirical evidence seems to suggest that resource abundant countries have on average lower budget deficits and inflation, and higher foreign exchange reserves. Besides, lower domestic fuel prices that are typical for resource rich countries have a positive effect on long-term growth even though they are associated with losses resulting from higher energy consumption. On top of that resource abundance allows to reduce income inequalities. So, on the one hand, resource wealth turns out to be conducive to growth, especially in countries with strong institutions. However, on the other hand, resource abundance leads to corruption of institutions and to overvalued real exchange rates. On balance, there is no solid evidence that resource abundant countries grow more slowly than the others, but there is evidence that they grow more slowly than could have grown with the right policies and institutions.

Popular Resource Sovereignty

2018 ◽  
Author(s):  
Leif Wenar
Keyword(s):  
Human Rights ◽  
Natural Resources ◽  
Large Scale ◽  
Good Reason ◽  
Resource Curse ◽  
Civil Conflict ◽  
Popular Sovereignty ◽  
State Sovereignty ◽  
The People ◽  
Rich Countries

Article 1 of both of the major human rights covenants declares that the people of each country “shall freely dispose of their natural wealth and resources.” This chapter considers what conditions would have to hold for the people of a country to exercise this right—and why public accountability over natural resources is the only realistic solution to the “resource curse,” which makes resource-rich countries more prone to authoritarianism, civil conflict, and large-scale corruption. It also discusses why cosmopolitans, who have often been highly critical of prerogatives of state sovereignty, have good reason to endorse popular sovereignty over natural resources. Those who hope for more cosmopolitan institutions should see strengthening popular resource sovereignty as the most responsible path to achieving their own goals.

scholarly journals What We Talk about When We Talk about Poverty: Culture and Welfare State Development in Britain, Denmark and France

2021 ◽  
pp. 1-24
Author(s):  
Cathie Martin ◽  
Tom Chevalier
Keyword(s):  
Economic Growth ◽  
National Level ◽  
Political Stability ◽  
Historical Case ◽  
Policy Makers ◽  
The Poor ◽  
Fiction Writers ◽  
Welfare State Development ◽  
Political Agents ◽  
Cross National

Why did historical anti-poverty programs in Britain, Denmark and France differ so dramatically in their goals, beneficiaries and agents for addressing poverty? Different cultural views of poverty contributed to how policy makers envisioned anti-poverty reforms. Danish elites articulated social investments in peasants as necessary to economic growth, political stability and societal strength. British elites viewed the lower classes as a challenge to these goals. The French perceived the poor as an opportunity for Christian charity. Fiction writers are overlooked political agents who engage in policy struggles. Collectively, writers contribute to a country's distinctive ‘cultural constraint’, or symbols and narratives, which appears in the national-level aggregation of literature. To assess cross-national variations in cultural depictions of poverty, this article uses historical case studies and quantitative textual analyses of 562 British, 521 Danish and 498 French fictional works from 1770 to 1920.

scholarly journals Do Commodity Price Shocks Cause Armed Conflict? A Meta-Analysis of Natural Experiments

2021 ◽  
pp. 1-8
Author(s):  
GRAEME BLAIR ◽  
DARIN CHRISTENSEN ◽  
AARON RUDKIN
Keyword(s):  
Causal Effect ◽  
Meta Analysis ◽  
Resource Curse ◽  
Civil Conflict ◽  
Commodity Price ◽  
Future Research ◽  
Natural Experiments ◽  
Price Changes ◽  
Price Increases ◽  
Commodity Price Shocks

Scholars of the resource curse argue that reliance on primary commodities destabilizes governments: price fluctuations generate windfalls or periods of austerity that provoke or intensify civil conflict. Over 350 quantitative studies test this claim, but prominent results point in different directions, making it difficult to discern which results reliably hold across contexts. We conduct a meta-analysis of 46 natural experiments that use difference-in-difference designs to estimate the causal effect of commodity price changes on armed civil conflict. We show that commodity price changes, on average, do not change the likelihood of conflict. However, there are cross-cutting effects by commodity type. In line with theory, we find price increases for labor-intensive agricultural commodities reduce conflict, while increases in the price of oil, a capital-intensive commodity, provoke conflict. We also find that price increases for lootable artisanal minerals provoke conflict. Our meta-analysis consolidates existing evidence, but also highlights opportunities for future research.

scholarly journals Assessing Short-Term Fertility Intentions and Their Realisation Using the Generations and Gender Survey: Pitfalls and Challenges

2020 ◽  
Author(s):  
Zuzanna Brzozowska ◽  
Eva Beaujouan
Keyword(s):  
Fertility Intentions ◽  
Fertility Intention ◽  
National Data ◽  
Short Term ◽  
Degree Of Certainty ◽  
Cross Country ◽  
And Gender ◽  
Questionnaire Adaptation ◽  
Cross National

AbstractThe use of fertility intention questions to study individual childbearing behaviour has developed rapidly in recent decades. In Europe, the Generations and Gender Surveys are the main sources of cross-national data on fertility intentions and their realisation. This study investigates how an inconsistent implementation of a question about wanting a child now affects the cross-country comparability of intentions to have a child within the next three years and their realisation. We conduct our analysis separately for women and men at prime and late reproductive ages in Austria, France, Italy and Poland. The results show that the overall share of respondents intending to have a child at some point in their life is similar in all four analysed countries. However, once the time horizon and the degree of certainty of fertility intentions are included, substantial cross-country differences appear, particularly in terms of proceptive behaviour and, consequently, the realisation of fertility intentions. We conclude that the inconsistent questionnaire adaptation makes it very difficult to assess the role of country context in the realisation of childbearing intentions.

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