Hostname: page-component-6bf8c574d5-rwnhh Total loading time: 0 Render date: 2025-02-15T14:49:08.125Z Has data issue: false hasContentIssue false
  • English
  • Français

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

Published online by Cambridge University Press:  04 April 2016

Sarah M. Brooks  and
Marcus J. Kurtz
Get access

Abstract

By 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.

Type
Research Article
Information
International Organization , Volume 70 , Issue 2 , Spring 2016 , pp. 279 - 311
Copyright
Copyright © The IO Foundation 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, Daron. 2003. Labor- and Capital-Augmenting Technical Change. Journal of the European Economic Association 1 (1):1–37.Google Scholar
Acemoglu, Daron, and Robinson, James A.. 2001. A Theory of Political Transitions. American Economic Review 91 (4):938–63.Google Scholar
Acemoglu, Daron, and Robinson, James A.. 2006. Economic Origins of Dictatorship and Democracy. New York: Cambridge University Press.Google Scholar
Acemoglu, Daron, Griffith, Rachel, Aghion, Philippe, and Zilibotti, Fabrizio. 2010. Vertical Integration and Technology: Theory and Evidence. Journal of the European Economic Association 8 (5):989–1033.Google Scholar
Acemoglu, Daron, Johnson, Simon, Robinson, James A., and Yared, Pierre. 2009. Reevaluating the Modernization Hypothesis. Journal of Monetary Economics 56 (8):1043–58.Google Scholar
Acemoglu, Daron, Robinson, James A., and Verdier, Thierry. 2004. Kleptocracy and Divide and Rule: A Theory of Personal Rule. Journal of the European Economic Association 2 (2–3):162–92.CrossRefGoogle Scholar
Ades, Alberto, and Tella, Rafael Di. 1999. Rents, Competition, and Corruption. American Economic Review 89 (4):982–93.CrossRefGoogle Scholar
Alesina, Alberto, and Spolaore, Enrico. 1997. On the Number and Size of Nations. Quarterly Journal of Economics 112 (4):1027–56.CrossRefGoogle Scholar
Alesina, Alberto, and Wacziarg, Romain. 1998. Openness, Country Size and Government. Journal of Public Economics 69 (3):305–21.Google Scholar
Amsden, Alice H. 1991. Diffusion of Development: The Late-Industrializing Model and Greater East Asia. American Economic Review 81 (2):282–86.Google Scholar
Amsden, Alice H. 1992. Asia's Next Giant: South Korea and Late Industrialization. New York: Oxford University Press.Google Scholar
Andersen, Jørgen J., and Ross, Michael L.. 2014. The Big Oil Change: A Closer Look at the Haber-Menaldo Analysis. Comparative Political Studies 47 (7):993–1021.Google Scholar
Aslaksen, Silje. 2010. Oil and Democracy: More than a Cross-Country Correlation? Journal of Peace Research 47 (4):421–31.Google Scholar
Auty, Richard A. 1994. Industrial Policy Reform in Six Large Newly Industrializing Countries: The Resource Curse Thesis. World Development 22 (1):11–26.CrossRefGoogle Scholar
Auty, Richard A. 2001. Resource Abundance and Economic Development. Oxford, UK: Oxford University Press.Google Scholar
Auty, Richard M., and Gelb, Alan H.. 2000. Political Economy of Resource Abundant States. Paper presented at the Annual Bank Conference on Development Economics, June, Paris.Google Scholar
Barro, Robert, and Lee, Jong-Wha. 2010. A New Data Set of Educational Attainment in the World. Working Paper 15902. Cambridge, MA: National Bureau of Economic Research.Google Scholar
Basu, Susanto, and Weil, David N.. 1998. Appropriate Technology and Growth. The Quarterly Journal of Economics 113 (4):1025–54.CrossRefGoogle Scholar
Benhabib, Jess, and Spiegel, Mark. 1994. The Role of Human Capital in Economic Development: Evidence from Aggregate Cross-Country Data. Journal of Monetary Economics 34 (2):143–73.Google Scholar
Birdsall, Nancy, Thomas Pinckney, and Sabot, Richard. 2001. Natural Resources, Human Capital, and Growth. In Resource Abundance and Economic Growth, edited by Auty, Richard M., 57–75. Oxford, UK: Oxford University Press.Google Scholar
Boix, Carles. 2003. Democracy and Redistribution. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Boix, Carles, and Stokes, Susan C.. 2003. Endogenous Democratization. World Politics 55 (4):517–49.Google Scholar
Bollen, Kenneth A., and Jackman, Robert W.. 1985. Political Democracy and the Size Distribution of Income. American Sociological Review 50 (4):438–57.Google Scholar
Bruton, Henry J. 1998. A Reconsideration of Import Substitution. Journal of Economic Literature 36 (2):903–36.Google Scholar
CAPES. História e Missão. Available at <http://www.capes.gov.br/historia-e-missao>. Accessed 15 March 2014..+Accessed+15+March+2014.>Google Scholar
Cardoza, Guillermo. 1999. Learning and Innovation Paths in East Asia. Science and Public Policy 26 (4):259–76.Google Scholar
Cavarozzi, Marcelo. 1992. Beyond Transitions to Democracy in Latin America. Journal of Latin American Studies 24 (3):665–84.Google Scholar
Chaudhry, Kiren A. 1997. The Price of Wealth: Economies and Institutions in the Middle East. Ithaca, NY: Cornell University Press.Google Scholar
Clark, John F. 1997. Petro-Politics in the Republic of Congo. Journal of Democracy 8 (3):62–76.CrossRefGoogle Scholar
Coatsworth, John H. 2005. Structures, Endowments, and Institutions in the Economic History of Latin America. Latin American Research Review 40 (3):126–44.Google Scholar
Collier, Paul, and Hoeffler, Anke. 2005. Resource Rents, Governance, and Conflict. Journal of Conflict Resolution 49 (4):625–33.CrossRefGoogle Scholar
Collier, Ruth. 1999. Paths Toward Democracy: The Working Class and Elites in Western Europe and South America. Cambridge, UK: Cambridge University Press.Google Scholar
Dantas, Eva, and Bell, Martin. 2009. Latecomer Firms and the Emergence and Development of Knowledge Networks: The Case of Petrobras in Brazil. Research Policy 38 (5):829–44.Google Scholar
Dasgupta, Partha. 2004. Human Well-Being and the Natural Environment. Oxford, UK: Oxford University Press.Google Scholar
David, Paul, and Wright, Gavin. 1997. Increasing Returns and the Genesis of American Resource Abundance. Industrial and Corporate Change 6 (2):203–45.Google Scholar
Davis, Graham A. 1995. Learning to Love the Dutch Disease: Evidence from the Mineral Economies. World Development 23 (10):1765–79.Google Scholar
Dixit, Avinash. 2007. Evaluating Recipes for Development Success. World Bank Research Observer 22 (2):131–57.Google Scholar
Dunning, Thad. 2005. Resource Dependence, Economic Performance, and Political Stability. Journal of Conflict Resolution 49 (4):451–82.Google Scholar
Dunning, Thad. 2008. Crude Democracy: Natural Resource Wealth and Political Regimes. New York: Cambridge University Press.Google Scholar
Fearon, James D. 2005. Primary Commodity Exports and Civil War. Journal of Conflict Resolution 49 (4):483–507.Google Scholar
Gelb, Alan. 1988. Oil Windfalls: Blessing or Curse? New York: Oxford University Press.Google Scholar
Gereffi, Gary. 1989. Rethinking Development Theory: Insights from East Asia and Latin America. Sociological Forum 4 (4):505–33.Google Scholar
Gerschenkron, Alexander. 1962. Economic Backwardness in Historical Perspective. Cambridge, MA: Belknap Press of Harvard University Press.Google Scholar
Gleditsch, Kristian Skrede, and Ward, Michael D.. 2006. Diffusion and the International Context of Democratization. International Organization 60 (4):911–33.CrossRefGoogle Scholar
Goldberg, Ellis, Wibbels, Eric, and Myukiyehe, Eric. 2008. Lessons from Strange Cases: Democracy, Development, and the Resource Curse in the US States. Comparative Political Studies 41 (4):477–514.Google Scholar
Grossman, Gene M., and Helpman, Elhanan. 1990. Trade, Innovation, and Growth. American Economic Review 80 (2):86–91.Google Scholar
Grossman, Gene M., and Helpman, Elhanan. 1991. Trade, Knowledge Spillovers, and Growth. European Economic Review 35 (2–3):517–26.Google Scholar
Gylfason, Thorvaldur. 2001. Natural Resources, Education, and Economic Development. European Economic Review 45 (4–6):847–59.CrossRefGoogle Scholar
Haber, Stephen. 2006. The Political Economy of Industrialization. In The Cambridge Economic History of Latin America. Vol. 2, The Long Twentieth Century, edited by Bulmer-Thomas, Victor, Coatsworth, John, and Cortes-Conde, Roberto, 537–84. Cambridge, UK: Cambridge University Press.Google Scholar
Haber, Stephen, and Menaldo, Victor. 2011. Do Natural Resources Fuel Authoritarianism? A Reappraisal of the Resource Curse. American Political Science Review 105 (1):1–26.Google Scholar
Haggard, Stephan, and Kaufman, Robert. 1995. The Political Economy of Democratic Transitions. Princeton, NJ: Princeton University Press.Google Scholar
Hilton, Stanley E. 1975. Vargas and Brazilian Economic Development, 1930–1945: A Reappraisal of His Attitude Toward Industrialization and Planning. Journal of Economic History 35 (4):754–78.Google Scholar
Jensen, Nathan, and Wantchekon, Leonard. 2004. Resource Wealth and Political Regimes in Africa. Comparative Political Studies 37 (7):816–41.Google Scholar
Jones Luong, Pauline, and Weinthal, Erika. 2010. Oil Is Not a Curse: Ownership Structure and Institutions in Soviet Successor States. New York: Cambridge University Press.Google Scholar
Karl, Terri L. 1987. Petroleum and Political Pacts: The Transition to Democracy in Venezuela. Latin American Research Review 22 (1):63–94.Google Scholar
Karl, Terri L. 1997. Paradox of Plenty: Oil Booms and Petro-States. Berkeley: University of California Press.Google Scholar
Kurtz, Marcus J., and Brooks, Sarah M.. 2011. Conditioning the “Resource Curse”: Globalization, Human Capital, and Growth in Oil-Rich Nations. Comparative Political Studies 44 (6):747–70.Google Scholar
Lall, Sanjaya. 1992. Technological Capabilities and Industrialization. World Development 20 (2):165–86.Google Scholar
Lall, Sanjaya. 1996. Learning from the Asian Tigers: Studies in Technology and Industrial Policy. New York: St. Martin's Press.Google Scholar
Leite, Carlos, and Weidmann, Jens. 1999. Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth. Working Paper 99/85. Washington, DC: International Monetary Fund.Google Scholar
Lipset, Seymour Martin. 1959. Some Social Requisites of Democracy. American Political Science Review 53 (1):69–105.Google Scholar
Love, Joseph. 2005. The Rise and Decline of Economic Structuralism in Latin America: New Dimensions. Latin American Research Review 40 (3):100–25.Google Scholar
Lumley, Sarah. 1997. The Environment and the Ethics of Discounting: An Empirical Analysis. Ecological Economics 20 (1):71–82.CrossRefGoogle Scholar
Mahdavy, Hossein. 1970. The Patterns and Problems of Economic Development in Rentier States: The Case of Iran. In Studies in the Economic History of the Middle East: From the Rise of Islam to the Present Day, edited by Cook, Michael A., 428–67. London: Oxford University Press.Google Scholar
Malloy, James, ed. 1977. Authoritarianism and Corporatism in Latin America. Pittsburgh, PA: University of Pittsburgh Press.Google Scholar
Marshall, Monty G., and Jaggers, Keith. 2011. Polity IV Project: Political Regime Characteristics and Transitions, 1800–2010 . Dataset Users’ Manual. Center for Systemic Peace. College Park: University of Maryland. Available at <http://www.systemicpeace.org/inscr/p4manualv2013.pdf>. Accessed 15 March 2013.Google Scholar
Mathews, John. 2001. National Systems of Economic Learning: The Case of Technology Diffusion Management in East Asia. International Journal of Technology Management 22 (5–6):455–79.Google Scholar
Mehlum, Halvor, Moene, Karl, and Torvik, Ragnar. 2006. Cursed by Resources or Institutions? World Economy 29 (8):1117–31.Google Scholar
Moore, Barrington. 1966. Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World. Boston: Beacon Press.Google Scholar
Morrison, Kevin M. 2009. Oil, Nontax Revenue, and the Redistributional Foundations of Regime Stability. International Organization 63 (1):107–38.Google Scholar
Moseley, William G. 2001. African Evidence on the Relation of Poverty, Time Preference and the Environment. Ecological Economics 38 (3):317–26.Google Scholar
Nelson, Richard R., and Phelps., Edmund S. 1966. Investment in Humans, Technological Diffusion, and Economic Growth. American Economic Review 56 (1–2):69–75.Google Scholar
Nelson, Richard R., and Wright, Gavin. 1992. The Rise and Fall of American Technological Leadership: The Postwar Era in Historical Perspective. Journal of Economic Literature 30 (4):1931–64.Google Scholar
O'Donnell, Guillermo. 1982. Reply to Remmer and Merkx. Latin American Research Review 17 (2):41–50.CrossRefGoogle Scholar
O'Donnell, Guillermo, and Schmitter, Philippe. 1986. Transitions from Authoritarian Rule, Vol. 4. Tentative Conclusions About Uncertain Democracies. Baltimore: Johns Hopkins University Press.Google Scholar
O'Loughlin, John, Ward, Michael D., Lofdahl, Corey L., Cohen, Jordin S., Brown, David S., Reilly, David, Gleditsch, Kristian S., and Shin, Michael. 1998. The Diffusion of Democracy, 1946–1994. Annals of the Association of American Geographers 88 (4):545–74.Google Scholar
Payne, Leigh A. 1991. Working Class Strategies in the Transition to Democracy in Brazil. Comparative Politics 23 (2):221–38.Google Scholar
Petrobras. 2009. Interview with Carlos Fraga, Executive Manager for Cenpes. Petrobras Magazine. Available at <http://www.hotsitespetrobras.com.br/petrobrasmagazine/Edicoes/edicao57/en/internas/programas-tecnologicos/>. Accessed 8 February 2014..+Accessed+8+February+2014.>Google Scholar
Przeworski, Adam, Alvarez, Michael, and Cheibub, José Antonio. 2000. Democracy and Development: Political Institutions and Well-Being in the World, 1950–1990. Cambridge, UK: Cambridge University Press.Google Scholar
Robinson, James A., and Verdier, Thierry. 2002. The Political Economy of Clientelism. CEPR Discussion Paper No. 3205. London: Centre for Economic Policy Research.Google Scholar
Robinson, James A., Torvik, Ragnar, and Verdier, Thierry. 2006. Political Foundations of the Resource Curse. Journal of Development Economics 79 (2):447–68.Google Scholar
Rock, David, ed. 1994. Latin America in the 1940s: War and Postwar Transitions. Berkeley: University of California Press.Google Scholar
Ron, James. 2005. Paradigm in Distress? Primary Commodities and Civil War. Journal of Conflict Resolution 49 (4):443–50.Google Scholar
Ross, Michael L. 2001. Timber Booms and Institutional Breakdown in Southeast Asia. New York: Cambridge University Press.CrossRefGoogle Scholar
Ross, Michael L. 2012. The Oil Curse: How Petroleum Wealth Shapes the Development of Nations. Princeton, NJ: Princeton University Press.Google Scholar
Roxborough, Ian. 1994. Labor Control and the Postwar Growth Model in Latin America. In Latin America in the 1940s: War and Postwar Transitions, edited by Rock, David, 248–64. Berkeley: University of California Press.Google Scholar
Rueschemeyer, Dietrich, Stephens, Evelyne Huber, and Stephens, John D.. 1992. Capitalist Development and Democracy. Chicago: University of Chicago Press.Google Scholar
Sá, Creso. 2005. Research Policy in Emerging Economies: Brazil's Sector Funds. Minerva 43 (3):245–63.Google Scholar
Sachs, Jeffery D., and Warner, Andrew. 1999. The Big Push, Natural Resource Booms and Growth. Journal of Development Economics 59 (1):43–76.Google Scholar
Schrank, Andrew. 2004. Reconsidering the Resource Curse: Selection Bias, Measurement Error, and Omitted Variables. Unpublished manuscript, Yale University, New Haven, CT.Google Scholar
Smith, Benjamin. 2004. Oil Wealth and Regime Survival in the Developing World, 1960–1999. American Journal of Political Science 48 (2):232–46.Google Scholar
Smith, Benjamin. 2007. Hard Times in the Land of Plenty: Oil Politics in Iran and Indonesia. Ithaca, NY: Cornell University Press.Google Scholar
Simmons, Beth A., Dobbin, Frank, and Garrett, Geoffrey. 2008. The Global Diffusion of Markets and Democracy. Cambridge, UK: Cambridge University Press.Google Scholar
Snyder, Richard. 2006. Does Lootable Wealth Breed Disorder? A Political Economy of Extraction Framework. Comparative Political Studies 39 (8):943–68.Google Scholar
Sokoloff, Kenneth L., and Engerman, Stanley L.. 2000. History Lessons: Institutions, Factors Endowments, and Paths of Development in the New World. Journal of Economic Perspectives 14 (3):217–32.Google Scholar
Sovereign Wealth Fund Institute. 2012. Sovereign Wealth Fund Rankings. Available at <http://www.swfinstitute.org/fund-rankings/>. Accessed 12 March 2013..+Accessed+12+March+2013.>Google Scholar
Stijns, Jean-Philippe. 2006. Natural Resource Abundance and Human Capital Accumulation. World Development 34 (6):1060–83.Google Scholar
Teece, David. 1977. Technology Transfer by Multinational Firms: The Resource Cost of Transferring Technological Knowhow. Economic Journal 87 (346):242–61.Google Scholar
Torvik, Ragnar. 2002. Natural Resources, Rent Seeking and Welfare. Journal of Development Economics 67 (2):455–70.Google Scholar
US Energy Information Agency (USEIA). 2010. Oil Market Basics: Supply. Available at <http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/supply_text.htm#Supply>. Accessed 1 June 2010..+Accessed+1+June+2010.>Google Scholar
Van Vactor, Samuel. 2008. How Oil Went from North to South. Working Paper 08–009. Cleveland, OH: US Association for Energy Economics.Google Scholar
van Wijnbergen, Sweder, 1984. The “Dutch Disease”: A Disease After All? Economic Journal 94 (373):41–55.Google Scholar
Wallerstein, Michael. 1980. The Collapse of Democracy in Brazil: Its Economic Determinants. Latin American Research Review 15 (3):3–40.Google Scholar
Waterbury, John. 1999. The Long Gestation and Brief Triumph of Import-Substituting Industrialization. World Development 27 (2):323–41.Google Scholar
Bank, World. 2010. World Development Indicators. Washington, DC: World Bank. Available at <http://data.worldbank.org/data-catalog/world-development-indicators/wdi-2010>. Accessed 21 February 2013.Google Scholar
Yates, Douglas. 1996. The Rentier State in Africa: Oil Rent Dependency and Neocolonialism in the Republic of Gabon. Trenton, NJ: Africa World Press.Google Scholar
Supplementary material: File

Brooks and Kurtz supplementary material S1

Brooks and Kurtz supplementary material

Download Brooks and Kurtz supplementary material S1(File)
File 722.2 KB
Supplementary material: File

Brooks and Kurtz supplementary material S2

Brooks and Kurtz supplementary material

Download Brooks and Kurtz supplementary material S2(File)
File 805 Bytes
Supplementary material: File

Brooks and Kurtz supplementary material S3

Brooks and Kurtz supplementary material

Download Brooks and Kurtz supplementary material S3(File)
File 2 KB