Does Oil Hinder Democracy? - Scholars at Harvard

1 downloads 555 Views 4MB Size Report
338. WORLD POLITICS the autocracy measure from the democracy measure.431 then rescale it as a 0-10 variable, with 10 rep
Trustees of Princeton University

Does Oil Hinder Democracy? Author(s): Michael L. Ross Reviewed work(s): Source: World Politics, Vol. 53, No. 3 (Apr., 2001), pp. 325-361 Published by: Cambridge University Press Stable URL: http://www.jstor.org/stable/25054153 . Accessed: 16/07/2012 16:29 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp

. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected].

.

Cambridge University Press and Trustees of Princeton University are collaborating with JSTOR to digitize, preserve and extend access to World Politics.

http://www.jstor.org

DOES OIL HINDER

DEMOCRACY?

ByMICHAEL L.ROSS*

Introduction scientists believe that oil has some very odd proper ties. Many POLITICAL to become

more

to this

tion

studies

show

democratic.

rule:

if rising

that when

incomes

tend rise, governments Yet some scholars imply there is an excep can be traced to a incomes oil country's

wealth, they suggest, this democratizing effect will shrink or disappear. oil really have

Does

properties? What

antidemocratic

about

other min

erals and other commodities? What might explain these effects? The

claim

specialists

to

is often used by area do not mix that oil and democracy states of the Arab Middle the high-income explain why

East have not become democratic. If oil is truly at fault, this insight could help explain?and perhaps, predict?the political problems of oil around the world, exporters states of Central the oil-rich

and such as Nigeria, Venezuela, Indonesia, If other minerals have similar prop Asia. account for the absence or weakness of de

this effect might help states in sub-Saharan in dozens of additional Latin Africa, mocracy and Southeast claim Asia. Yet the "oil impedes democracy" America, has received little attention outside the circle of Mideast scholars; erties,

moreover,

it has not been

carefully

tested with

regression

analysis,

ei

ther within or beyond theMiddle East. I use pooled and 1997

1971

time-series

cross-national

to

three

explore

aspects

data from

113

states between

of the oil-impedes-democracy

claim. The first is the claims validity: is it true?Although the claim has been championed byMideast specialists, it is difficult to test by examining only

cases from

theMiddle

East because

*

the region provides

scholars with

Previous versions of this article were presented to seminars at Princeton University, Yale Univer of California, Los Angeles, of the and at the September 2000 annual meeting sity, and the University inWashington, American D.C. For their thoughtful comments on ear Political Science Association Indra de Soysa, Geoffrey Garrett, Phil Keefer, Steve lier drafts, I am grateful to Pradeep Chhibber, Lowi, Ellen Lust-Okar, Lant Pritchett, Nicholas Sambanis, Jennifer Widner, Michael Knack, Miriam reviewers. I owe special thanks to Irfan Nooruddin for his research and three anonymous Woolcock, assistance and advice and to Colin Xu for his help with the Stata. I wrote this article while Iwas a vis Bank inWashington, D.C. The views I express in this article, and all re iting scholar at The World errors, are mine alone. maining

WorldPolitics 53 (April2001), 325-61

326 WORLD

POLITICS

Table 1 Index of Oil-Reliant 1. Brunei (1994)

Statesa

47.58

46.14

2. Kuwait

3. Bahrain 45.60 4. Nigeria (1991) 45.38 5. Congo,

Dem.

45.14

Rep.

6. Angola (1996)

45

38.58

7. Yemen

38.43

8. 9. 10. 11. 12. 13.

33.85 Qatar (1994) 33.85 Libya (1988) 29.74 Iraq (1983) 23.48 Algeria 21.44

14.

Venezuela

Oman Saudi Arabia

18.84

15. Syria 15.00 16.

13.46

Norway

17. Iran (1983) 11.95 18. Ecuador 8.53 19. Malaysia 5.91 20.

Indonesia

21.

Cameroon

5.69 5.63

22. Lithuania 4.48 23. Kyrgyz Republic (1996) 24.

4.25

3.14

Netherlands

3.13

25. Colombia

ismeasured

aOil reliance

by the value

of fuel-based

exports

divided

by

GDP. Most

figures

are based on data for 1995 fromWorld Bank (fn. 71).Figures for Brunei, Nigeria, Qatar, Libya,

Iraq,

and Iran are the most

gyz Republic

are not

little variation ments

have

available,

recent

1996

available.

figures

are

Since

1995

figures

for Angola

reported.

on the dependent been authoritarian

variable: virtually allMideast govern since gaining Moreover, independence. in the for the absence of democracy explanations

there are other plausible the influence of Islam and the regions distinct Mideast, including influence and colonial history. Does oil have a consistently negative once one accounts other variables? for these and mocracy Second,

and Kyr

I examine

is geographic.

For

on de

two dimensions. the claim's generality along reasons the oil-impedes-democracy obvious

has been explored most carefully byMideast teen states most

culture

reliant

on oil wealth

One claim

specialists: ten of the fif

are in the Middle

East

region

(see

Table 1). But is oil an obstacle to democracy only in theMideast, or does it harm oil exporters everywhere? If the hypothesis is true for all oil-rich

DOES OIL HINDER DEMOCRACY? Table 2 of Mineral-Reliant

_Index 1. Botswana

327

States'1_

35.11

2. 3. 4. 5. 6. 7. 8. 9. 10.

Zambia Bahrain Chile

Angola (1996) 11.5 Papua New Guinea 10.13 Togo (1991) 7.79 Bolivia 5.53 Congo, Dem. Rep. (1983) Jordan 5.28

11.

Peru

24.97 16.39 12.63

7.00

3.84

12. Central African Republic 3.16 13. Iceland 3.11 14. Zimbabwe 3.00 15. Norway

2.49

16. Belgium 2.23 17.

Canada

2.22

18. Australia

19. 20. 21. 22.

2.20

1.96 1.87 Jamaica Slovak Republic 1.74 South Africa 1.69 Lithuania

23. Morocco 24.

1.65

Cameroon

1.62

25. Kyrgyz Republic

1.56

aMineral reliance ismeasured by the value of nonfuel mineral exports divided by GDP. Most figures are for 1995 based on data fromWorld Bank (fn. 71). The figures for Congo and

Togo

are the most

recent

available;

the 1996

figure

is

reported

since no

for Angola,

fig

ure for 1995 is available.

states, then its importance has been underappreciated by other political scientists. If it holds only for states in theMideast, why is this so? is sectoral: do other types of minerals dimension and on of commodities have similar effects While types governments? in the Middle oil exporters tend to be concentrated of East, exporters The

other

other

nonfuel minerals aremore geographically dispersed (seeTable 2). Have these wealth? found

states, too, been rendered have Or does petroleum in other

less democratic antidemocratic

because properties

of resource that are not

commodities?

Finally, I explore the question of causality: if oil does have antidem ocratic

effects,

explanations:

what

is the causal

a "rentier

effect,"

mechanism? which

suggests

I test that

three

possible resource-rich

WORLD POLITICS

328 use

tax rates

to relieve pressures for and patronage resource that which effect," argues accountability; "repression to boost their retards democratization by enabling governments

governments

low

a

greater wealth

a "modernization funding for internal security; and that growth based on the export of oil and minerals the

social

and cultural

changes

that

effect," which fails to bring to democratic produce

tend

holds about gov

ernment.

I also have

two broader to

study democracy Many

"global"

studies

aims. The

first

the Middle

incorporate of democratization

is to encourage scholars who East into their analyses.

have

avoided

en

the Mideast

tirely.1 Influential studies by Przeworski and Limongi and Przeworski, Alvarez, Cheibub, and Limongi simply drop the oil-rich Mideast states from

their database.2

scholars doing

There

of democracy so can only weaken

is, however, to exclude these any general

no

reason for analytical from their research, and It also tends to margin

sound

states

findings.

alize the field ofMiddle East studies. My

second

aim

is to address

the literature

on the "resource

curse."

Many of the poorest and most troubled states in the developing world have,

high paradoxically, body of evidence growing

levels

of natural

resource

that resource wealth

wealth.

There

is a

itself may harm a coun resource greater natural

for development. States with try's prospects counter wealth tend to grow more slowly than their resource-poor are also more to suffer from civil wars.4 This article likely parts.3 They that there is a third suggests as well oil and mineral wealth tends to make

to the resource component states less democratic.

curse:

1 eds., O'Donnell, See, for example, Guillermo Philippe C. Schmitter, and Lawrence Whitehead, Rule: Prospects for Democracy Transitions from Authoritarian (Baltimore: Johns Hopkins University Press, 1986); D. Larry Diamond, Juan J. Linz, and Seymour Martin Lipset, eds., Democracy inDevel Ronald Inglehart, Modernization andPostmod oping Countries (Boulder, Colo.: Lynne Rienner, 1988); emization Press, 1997). (Princeton: Princeton University 2 and Facts," World Politics 49 Adam Przeworski and Fernando Limongi, "Modernization: Theories and Fernando Limongi, Cheibub, (January 1997); Adam Przeworski, Michael Alvarez, Jos? Antonio 7 (January 1996); idem, Democracy and De "What Makes Democracies Endure?"JournalofDemocracy in the World, 1950-1990 Institutions and Well-Being (New York: Cambridge Uni velopment: Political versity Press, 2000). 3 and Economic Growth," "Natural Resource Abundance Jeffrey D. Sachs and Andrew M. Warner, no. 517a Institute for International Develop Discussion (Cambridge: Harvard Development Paper ment, 1995); idem, "The Big Push, Natural Resource Booms and Growth," Journal ofDevelopment "Does Mother Nature Corrupt? Nat Economics 59 (February 1999); Carlos Leite and JensWeidmann, IMF ural Resources, Corruption, and Economic Growth," (1999); Michael Working Paper, WP/99/85 L. Ross, "The Political Economy of the Resource Curse," World Politics 51 (January 1999); R. M. Auty, Resource Abundance and Economic Development (Oxford: Oxford University Press, 2001). 4 "On Economic Causes of Civil War," Oxford Economic Papers 50 Paul Collier and Anke Hoeffler, or Curse: Are Civil Wars Driven 1998); Indra de Soysa, "The Resource (October by Rapacity eds., Greed and Grievance: Economic Agendas in Civil Paucity?" inMats Berdal and David M. Malone, Wars (Boulder, Colo.: Lynne Rienner, 2000).

DOES OIL HINDER DEMOCRACY?

329

claim and the limi

I begin by outlining the oil-impedes-democracy

of previous work on the topic. I then draw on earlier case stud states to ies of oil-rich that might three causal mechanisms specify more next sec authoritarian. The how oil makes governments explain tations

a model the research design. tion presents of regime types and describes tests and follow I then present the results of the validity and generality a discussion that with of the results of tests on the causal mechanisms and a conclusion.

of the

The Concept

"Rentier

State"

of the Mideast often describe most of the governments specialists a as and North Africa "rentier states," since they derive large fraction of than half of the government's their revenues from external rents.5 More

Area

revenues in Saudi Arabia, Bahrain, the United Arab Emirates, Oman, Kuwait,

and Libya

Qatar,

governments rents from

have,

of Jordan,

at times, and Egypt

Syria, for pipeline payments the Suez Canal. Workers'

through source of foreign

exchange

Algeria, andMorocco,

in

come

the sale of oil. The

from

earn

large locational fees, and passage have been an important Tunisia, Syria, Lebanon,

variously transit crossings,

remittances

Egypt,

Yemen,

although these rents go (at least initially) to pri

to Israel, and Egypt, foreign aid that flows a rent. type of economic in the early twentieth the term "rentier used century states that extended to the loans to non European

vate actors, not the state. The Jordan may also be considered Economists state"

to refer

European governments.6 Mahdavy

iswidely credited with giving the

a state that receives substantial its current meaning: or concerns Beblawi "foreign individuals, governments."7 one a state is rentier where that this definition, suggesting term

rents

from

later refined the rents are

accrue to the state, and where directly they paid by foreign actors, where a few are in the generation of this rent (wealth), the ma engaged "only

jority being only involved in the distribution or utilization of it."8

5 Throughout Banks definition

this article I use the term "Middle East"

to include North Africa. I adopt theWorld of this region: Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates, and Yemen. Libya, Malta, Morocco, 6 to Lenin, "The rentier state is a state of parasitic, decaying capitalism, and this circum According of the countries concerned." V. I. stance cannot fail to influence all the socio-political conditions in Robert C. Tucker, ed., The Lenin Anthology the Highest Lenin, "Imperialism, Stage of Capitalism," (New York: W. W. Norton, 1975). 7 in Rentier States: The "The Patterns and Problems of Economic Development Hussein Mahdavy, Case of Iran," inM. A. Cook, ed., Studies inEconomic History of theMiddle East (London: Oxford Uni versity Press, 1970), 428. 8 Beblawi and Giacomo Lu in Hazem "The Rentier State in the Arab World," Hazem Beblawi, excludes that this definition 1987), 51. Note ciani, eds., The Rentier State (New York: Croom Helm,

WORLD POLITICS

330 about

Claims those

the rentier

that

oil wealth

suggest causes that suggest oil wealth economic moting development. cle focuses

state

can be

makes

sorted

states

into

two

less democratic

categories: and those

to do a poorer governments job of pro arti Often the two are conflated. This

on the first claim.

to Anderson, "The notion of the rentier state is one of the According sci of Middle contributions East regional studies to political major now use a version some scholars of of ence."9 Indeed, this democracy to account states of the Middle for the otherwise argument puzzling East. Huntington,

for example,

that the democratic

suggests

trend may

East since many of these states "depend heavily on

bypass theMiddle

oil exports, which of the state bureaucracy."10 enhances the control out countries Others have adapted the "rentier state" idea to oil-rich

side theMiddle

East.11

has not per se inhibits democratization as most been subjected statistical tests, however, quantitative it as an explanatory variable. And studies of democracy overlook simply states have odd prop that oil-rich the handful that even acknowledge The

claim

that oil wealth to careful

erties do little

to

for ex and his collaborators, if their "ratio of fuel exports eccentric cri fifty percent"?an

explain why. Przeworski countries from their database

ample, drop to total exports in 1984-1986 exceeded terion that excludes six oil-rich states,

all of which

are located

on the

a

includes dummy study of democracy a minimum net oil exports represent of two one to thirds of total exports and are at least equivalent approximately is statistically percent of world exports of oil."13 The Barro oil dummy as in the But correlated with and democracy. significant negatively

Arabian

Peninsula.12

variable

for states

analyses

of Przeworski

Barro's

"whose

et al., the dummy

variable

uses

an

arbitrary

cut

remittances. As Chaudhry notes, large flows of remittances have different political implica tions than do large oil rents. See Kiren Aziz Chaudhry, The Price ofWealth: Economies and Institutions in theMiddle East (Ithaca, N.Y.: Cornell University Press, 1997). 9 East and North Africa," Comparative Politics 20 (Octo Lisa Anderson, "The State in the Middle ber 1987), 9. 10 in the Late Twentieth Century (Norman: The Third Wave: Democratization Samuel P. Huntington,

workers'

of Oklahoma Press, 1991), 31-32. University 11 "Rent Capitalism, State, and Democracy: A Theoretical See, for example, Olle T?rnquist, Propo on Southeast Asia, sition," in Arief Budiman, ed., State and Civil Society in Indonesia, Monash Papers no. 22 (1990); in and Neocolonialism Douglas A. Yates, The Rentier State inAfrica: Oil Rent Dependency the Republic of Gabon (Trenton, N.J.: Africa World Press, 1996); Terry Lynn Karl, The Paradox of of California Press, 1997); John Clark, "Petro (Berkeley: University Plenty: Oil Booms andPetro-States of the State 8 (July 1997); idem, "The Nature and Evolution Politics in Congo,"Journalof'Democracy 32 (Winter 1998). in Zaire," Studies in Comparative International Development 12 et al. (fn. 2,2000), 77. See Przeworski 13 107 (December 1999). Robert J. Barro, "Determinants of Democracy," Journal ofPoliticalEconomy

DOES OIL HINDER DEMOCRACY?

331

to "oil states" and "non-oil states" and im between distinguish some thresh or no influence on until has little that oil regime type plies old is reached.

point

also studies of the oil-impedes-democracy Qualitative hypothesis have been country-level have important limitations. The vast majority case studies of oil-rich states in the Mideast. many have been Although a is nevertheless rich and analytically the Mideast nuanced, empirically difficult

place have

ernments

absence

The

to test this claim, since gov virtually all oil-rich Mideast since gaining been highly authoritarian independence. as on on the well variable?as of variation dependent

It has control variable?has made Islam, an important testing difficult. to tasks that would also allowed Mideast help neglect specialists the key claim?defining sharpen and refine the oil-impedes-democracy in falsifiable the causal arguments variables better, specifying terms, and cases to which their the relevant domain of arguments apply. outlining As

a result,

the notion

of conceptual

overstretch:

of the rentier assertions

state has about

suffered

from

a bad case

of oil on Mid

the influence

dle East politics have become so general that their validity has been di luted. As Okruhlik imply One

so much

that

state has come

"The idea of the rentier observes, it has lost its content."14

way to restore the usefulness it statistically. I thus evaluate

of an overstretched one

core facet

concept of the rentier

to

is by state

testing three questions. claim?with concept?the oil-impedes-democracy a oil and authoritar valid correlation between First, is there statistically can the for? Second, ianism once other germane variables are accounted

claim be generalized both beyond theMiddle East and beyond the case of oil? Finally, if oil thwarts democracy, what is the causalmechanism? Proponents

of the oil-impedes-democracy

hypothesis

naturally

sug

gest both that it is valid and that it can be generalized to oil exporters outside theMiddle East. Some also imply that other types of com modities have similar effects. Nothing in Beblawi s definition, which is restricts the set of rentier among Mideast specialists, accepted to cover many to oil exporters. In fact, the definition appears on the tend to generate that (1) minerals mineral exporters grounds rents, (2) the rents are largely captured by states via export taxes, cor extraction and (3) mineral taxes, and state-owned porate enterprises, same little labor. The however, definition, implies relatively employs of agricultural will not be rentier states. that exporters commodities

widely states

14 Gwenn

Okruhlik,

"Rentier Wealth,

tics31 (April1999), 308.

Unruly

Law, and the Rise of Opposition,"

Comparative

Poli

332

WORLD

POLITICS

is because (1) agricultural commodities generally do not produce

This

cases go in most rents, (2) export revenues directly is more the state, and (3) agricultural production a hence employs fraction of the population larger

to

not private actors, labor intensive and

for a given

value

of

exports.15

Causal Mechanisms At

least

tween

three

Mideast

the alleged link be might explain rule. The first comes largely from

causal mechanisms and authoritarian

oil exports

specialists and might be called the "rentier effect." A close

case studies a second mechanism: suggests reading of a third fect." Modernization theory implies possible the "modernization effect."

The Rentier

Effect comes from the work of Middle

The first causal mechanism scholars, who have pondered eral they argue that governments that might otherwise pressures ability. Case

a ef "repression I call cause, which

studies

describe

issue for over

this

use

their oil revenues

lead to demands

three ways

East

two decades.16

this may

In gen to relieve social

for greater occur.17

account

The first is through what might be called a "taxation effect." It sug gests

revenues from the sale of derive sufficient governments or not at all, and to tax their less heavily likely populations

that when

oil, they

are

the public in turnwill be less likely to demand accountability from? in?their and representation government.18 in studies of the evolution is grounded of The of the argument logic in Histori institutions and France. democratic early modern England ans and scientists political arose tion in government

for representa have argued that the demand to raise to the in response sovereign's attempts

15 con states are politically Note that, by contrast, dependency theory suggests that developing to advanced industrialized strained by their reliance on the export of ?///types of primary commodities states. See, for Cardoso and Enzo Faletto, Dependency and Development example, Fernando Henrique of California Press, 1979); Peter Evans, Dependent Development: in Latin America (Berkeley: University Princeton University The Alliance ofMultinational, State, and Local Capital in Brazil(Princeton: Press, and Democracy: The Cross-Na "World System Position, Dependency, 1979); Kenneth A. Bollen, tional Evidence," American Sociological Review 48 (August 1983). 16 (fn. 8), notes that "theories of the ren Perhaps they have thought about it too carefully. Chaudhry tier state far outstrip detailed empirical analysis of actual cases" (p. 187). 17 to clar Case studies often conflate these three effects. I treat them here as separate mechanisms ify their logic. 18 Giacomo Luciani, Luciani (fn. 8).

"Allocation

vs. Production

States: A Theoretical

Framework,"

in Beblawi

and

DOES OIL HINDER DEMOCRACY? taxes.19 Some Mideast tween

scholars

in tax levels

variations

found

have

looked

for similar

333 correlations

in the demand for political the govern that the discovery of oil made to the traditional merchant less accountable and variations

accountability. Crystal ments of Kuwait and Qatar class.20 Brand's study of Jordan

that a drop in foreign in the 1980s led to greater pressures mittances for political not all Middle have been tion.21 Yet East specialists argues

Waterbury

be

argued

that "neither historically

nor in the twentieth

aid and re representa persuaded: is

century

theremuch evidence [in theMiddle East] that taxation has evoked de mands

account for their use of tax monies. that governments Predatory in the countryside, but there has has produced revolts, especially no translation of tax burden into pressures for democratization."22

taxation been

A

of the rentier effect might

second component effect":

oil wealth

"spending in turn age, which dampens for example, Entelis, argues

be called the

on may lead to greater patron spending latent pressures for democratization.23 that

the Saudi Arabian

government

used

its oil wealth for spending programs that helped reduce pressures for democracy.24

Vandewalle

government.25

Mexican

And

Kessler

a similar

about the Libyan argument and Bazdresch and Levy find that the

makes

oil boom of the 1970s helped prop up?and

long?one-party

rule.26 While

all authoritarian

perhaps pro

governments

may

use

19 States inWestern Europe (Princeton: Princeton Uni Charles Tilly, ed., The Formation ofNational Donald Lien, "ANote on Taxation, Development, versity Press, 1975); Robert Bates and Da-Hsiang and and Representative Politics and Society 14 (January 1985); Philip T Hoffman Government," 1450-1789 Government, (Stanford, eds., Fiscal Crises, Liberty, and Representative Kathryn Norberg, Calif.: Stanford University Press, 1994). 20 inKuwait and Qatar (New York: Jill Crystal, Oil and Politics in the Gulf: Rulers andMerchants Press, 1990). Cambridge University 21 in a Rentier Economy: The Case of the Laurie A. Brand, "Economic and Political Liberalization and Liberal Hashemite of Jordan," in Iliya Harik and Denis J. Sullivan, eds., Privatization Kingdom Indiana University ization in theMiddle East (Bloomington: Press, 1992). 22 in The Potential for Political Liberalization John Waterbury, "Democracy without Democrats? theMiddle East," in Ghassan Salame, ed., Democracy without Democrats? The Renewal ofPolitics in the Muslim World (New York I. B.Tauris, 1994), 29. 23 a formal model that makes a similar point, that resource wealth Lam andWantchekon develop can the distributive influence of an elite. Ricky Lam and Leonard impede democracy by enhancing as a Political Dutch Disease" of Political Sci Wantchekon, (Manuscript, Department "Dictatorships ence, Yale University, January 1999). 24 in the Arabian Peninsula: and the Prospects for Democratization "OilWealth John P. Entelis, in Naiem A. Sherbiny and Mark A. Tessler, eds., Arab Oil: Impact on the The Case of Saudi Arabia," Arab Countries and Global Implications (New York: Praeger, 1976). 25 Dirk Vandewalle, (Ithaca, N.Y.: Cornell Univer Libya since Independence: Oil and State-Building sity Press, 1998). 26 Carlos Bazresch

in and Santiago Levy, "Populism and Economic 1970-82," Policy inMexico, in Latin America and Sebastian Edwards, eds., The Macroeconomics of Populism R?diger Dornbusch P. Kessler, Global Capital and National Politics: of Chicago Press, 1991); Timothy (Chicago: University sFinancial System (Westport, Conn.: Praeger, 1999). Reforming Mexico

WORLD POLITICS

334

their fiscal powers to reduce dissent, these scholars imply that oil wealth providesMiddle East governments with budgets that are exceptionally Rulers large and unconstrained.27 same tactics as their authoritarian enues

could make

in the Middle

East

may

follow

the

but oil rev

elsewhere, counterparts at fiscal more effective. pacification

their efforts

The third component might be called a "group formation" effect. It a that when oil revenues with government provide enough use to the will its of the formation money, government prevent largesse social groups that are independent from the state and hence that may implies

be inclined to demand political rights. One version of this argument is inMoore's

rooted

claim

the formation

that

of an independent

bour

geoisie helped bring about democracy inEngland and France.28 Schol ars the cases of Algeria, and Iran have all examining Libya, Tunisia, states observed oil-rich the formation of social blocking independent a state all is that the groups; argue necessary precon thereby blocking dition of democracy.29 A second version of the group-formation effect draws on Putnam's that the formation argument above the family and below cratic governance.30 Scholars

of social

institutions that lie capital?civic to promote more demo the state?tends cases of the Iran, Iraq, studying Algeria,

and the Arab Gulf states have all suggested that the government's oil wealth has impeded the formation of social capital and hence blocked a transition

to

democracy.31

Whether Mideast formation

group First suggests

states use their oil revenues to deliberately inhibit

In the case of of some disagreement. Libya, "there is not a consistent the of policy against development is a matter

27 Lisa Anderson, "Peace and Democracy in the Middle East: The Constraints of Soft Budgets," Journal of International Affairs 49 (Summer 1995). 28 Social Origins ofDictatorship and Democracy (Boston: Beacon Press, 1966). Moore, 29Barrington see Clement in theMaghreb," On Algeria, "Petroleum and Political Development Henry Moore, in Sherbiny and Tessler (fn. 24); on Libya, see Ruth First, "Libya: Class and State in an Oil Economy," in Petter Nore and Terisa Turner, eds., Oil and Class Struggle (London: Zed Press, 1980); also on Libya, see Vandewalle (fn. 25); on Tunisia, see Eva Bellin "The Politics of Profit inTunisia: Utility of the Ren tier Paradigm?" World Development 22 (March 1994); and on Iran, see Hootan Shambayati, "The Ren tier State, Comparative 30 Robert

Interest Groups, and the Paradox Politics 26 (April 1994).

of Autonomy:

State

and Business

in Turkey

and Iran,"

Putnam, Making Democracy Work: Civic Traditions inModern Italy (Princeton: Princeton Press, 1993). University 31 see John P. Entelis, "Civil Society and the Authoritarian in Algerian On Algeria, Temptation Politics," inAugustus Richard Norton, ed., Civil Society in theMiddle East, vol. 2 (Leiden: E. J. Brill, 1995); on Iran, see Farhad Kazemi, "Civil Society and Iranian Politics," in Norton; on the Gulf states, on see Zuhair Humadi, see Jill "Civil Crystal, "Civil Society in the Arab Gulf States," inNorton; Iraq, ed., Toward Civil Society in theMiddle East? Society under the Ba'th in Iraq," in Jillian Schwedler, of civil society scholars have argued that the weakness 1995). Other (Boulder, Colo.: Lynne Rienner, that oil wealth is the in theMiddle East has hampered a transition to democracy, without suggesting source of this weakness.

DOES OIL HINDER DEMOCRACY?

335

an

but the growth of this class is in practice con bourgeoisie, indigenous ventures and its links with interna strained by the state s own economic tional capital."32 Chaudhry, argues that in the 1970s the by contrast, revenues to their oil that Mideast used governments develop programs were to In the all cases, "explicidy designed depoliticize population....

governments deliberately destroyed independent civil institutions while to facilitate aims of the state."33 the political designed the and effects taxation, Collectively, spending, group-formation a states fiscal constitute the rentier effect. Together that they imply its regime that fund themselves influence type: governments policies others

generating

revenues and have through oil that thoritarian; governments are more small relatively likely

The Repression A

close

reading

larger budgets fund themselves to become

are more

through democratic.

likely taxes

to be au and are

Effect of case studies

from

the Mideast,

Africa,

and Southeast

Asia suggests that oil wealth and authoritarianism may also be linked as states may want in resource-rich Citizens democracy by repression. as citizens resource allow their much but wealth elsewhere, may gov so block the more on internal ernments to and security popula spend notes of Iran's tions democratic that much aspirations. Skocpol she calls oil wealth was spent on the military, producing what pre-1979 a "rentier absolutist

in his study of the 1990s oil boom in state."34 Clark, allowed the of Congo, finds that the surge in revenues to build up the armed forces and train a government special presidential to East de order.35 And Gause argues that Middle guard help maintain the Republic

mocratization

has been inhibited in part by the prevalence of the

state.36 security) resource wealth two reasons lead to might why forces. One may be pure self-interest: larger military given the oppor an authoritarian to better arm itself pressures, against popular tunity so. A second reason may be that resource will do government readily a causes ethnic or reflect wealth larger military might regional conflict; mukhabarat There

(national are at least

the government

s response. Mineral

wealth

is often

geographically

con

32 First (fn. 29), 137. 33 of the Rentier State," Com Kiren Aziz Chaudhry, and the Lineages "Economic Liberalization 9. parative Politics 27 (October 1994), 34Theda Skocpol, "Rentier State and Shi'a Islam in the Iranian Revolution," Theory and Society 11

1982). (April 35

Clark (fn. 11,1997). 36 in the Arab in Political Liberalization F. Gregory Gause II, "Regional Influences on Experiments and Democrati in Rex Brynen, Bahgat Korany, and Paul Noble, eds., Political Liberalization World," zation in theArab World, vol. 1, Theoretical Perspectives (Boulder, Colo.: Lynne Rienner, 1995).

336

WORLD POLITICS

an in a region by populated resource extraction may or exac ethnic promote religious minority, as federal, actors compete erbate ethnic tensions, and for local regional, to and mineral These lead forces rights. disputes may larger military states such as An in resource-rich, less democracy fractured ethnically centrated.

If it

happens

to be concentrated

or

the Democratic of Congo, Burma, Indonesia, Nigeria, Republic New Sierra and South Africa. This mechanism Leone, Guinea, Papua gola,

would be consistent with the research of Collier and Hoeffler Soysa, who find more likely.37

resource

that natural

The Modernization

wealth

tends

to make

and de civil war

Effect

a third Finally, explanation which holds that democracy

can be derived is caused

from modernization

a collection by

of social

theory, and cul

and tural changes?including urbanization, specialization, occupational in turn are caused by economic levels of education?that devel higher different clusters of social and scholars emphasize opment.38 Different cultural from impact

on the likelihood

comes

the most

carefully shaped position that two types of social change have that a state will become democratic:

changes. Perhaps who argues Inglehart,

a direct

1. Rising education levels,which produce amore articulate public that is bet ter

equipped

to

organize

and

communicate,

and

2. Rising occupational specialization, which first shifts the workforce secondary autonomous

sector

and

then

workforce,

into

the

accustomed

sector. These tertiary changes to for themselves thinking

produce on the

into the amore job

and

having specialized skills that enhance their bargaining power against elites.39 not address the of re modernization question theory does Although an source wealth if economic is that per se, develop implicit corollary ment it will not and social changes, these cultural does not produce result

notes: aIs the As Inglehart linkage between not: if se? due to wealth and democracy per Apparently then resulted from simply becoming wealthy, automatically

in democratization.

development

democracy if In other words, Kuwait and Libya would be model democracies."40 not lead to and education levels does resource-led higher growth 37 See Collier and Hoeffler (fn. 4); de Soysa (fn. 4). 38 Economic and of Democracy: Development Seymour Martin Lipset, "Some Social Requisites "Social 53 (March 1959); Karl W. Deutsch, Political Legitimacy," American Political Science Review American Political Science Review 55 (September 1961); In Mobilization and Political Development," glehart (fn. 1). 39 (fn. 1), 163. 40 Inglehart Ibid., 161.

DOES OIL HINDER DEMOCRACY?

337

it should also fail to occupational specialization, bring about de the rentier Unlike the and modernization effects, mocracy. repression state: it is a social mechanism, not a effect does not work the through one. political The and modernization effects are largely com rentier, repression, on the use of fiscal rentier The effect focuses plementary. government's greater

measures fect

to

the public keep the government's

stresses

the repression ef demobilized; politically use of force to keep the public demobi effect looks at social forces that may keep

lized; and the modernization All the public demobilized. be them, may simultaneously

Model

or any combination

three

explanations, valid.41

Specification

and Research

of

Design

a model to claim, I present predict a feasible generalized least-squares a in time-series with cross-national data set, which pooled on over one states data all sovereign with populations hundred

test the oil-impedes-democracy types and test it using regime

To

method cludes

thousand between 1971 and 1997. The model includes five causal vari ables nants

that according of democracy.

and mineral The

to studies are the most robust determi previous a state s oil measure It also includes variables that

to see if they add explanatory is: model regression

wealth

basic

= + Regime.t a1 b/Oil.i5) + + bjlslam.) b/OECDJ where

+ +

b/Minerals. b?Regime.J

power.

) + b/Log Income. J + + b/YearJ... bJYearJ

and / is the year.

/ is the country

The dependent variable, Regime, is derived from the Polity98 data set constructed 0-10

states

entiates

between

variable

differentiates

cators

contain

each country

two Gurr and Jaggers compile and AUTOC; the former differ while the latter that are relatively democratic,

and Jaggers.42 by Gurr DEMOC scale variables,

interval

between

authoritarian

states. of

Since

the two

information

separate, types nonoverlapping them into a single measure year, I combine

indi about

by subtracting

41A fourth explanation has been offered by U.S. vice president Richard Cheney, a political scientist see fit to put oil and gas reserves where there are by training: "The problem is that the good Lord didn't in in David "Oil and Politics Mix democratic Cited Ignatius, governments." Suspiciously Well America," Washington Post, July 30,2000, A31. 42 1. Ted R. Gurr and Keith Jaggers, Each of the variables is defined more precisely in Appendix 1999 (con 1800-1998," "Polity 98: Regime Characteristics, http://www.bsos.umd.edu/cidcm/polity/, sulted March

1,2000).

338

WORLD

POLITICS

the autocracy measure from the democracy then rescale it measure.431 as a 0-10 variable, with 10 representing "most democratic.,, are the measure Oil and Minerals the ex variables; independent they value of mineral-based fuels natural and coal) and gas, port (petroleum, ores and metals as fractions of GDP. the export value of nonfuel exports, These sources

variables

of fuels capture both the importance of export revenue and their relative importance

as

and minerals in the domestic

economy.44

The

side of the equation also includes five control vari to capture most the factors associated with designed robustly are available for most of the countries for which indicators regime type, as the natural and years. The first is Income, measured log of per capita GDP corrected for purchasing interna power parity (PPP), in current right-hand

ables

as a correlate tional dollars. Per capita income has been widely accepted re its validity has been confirmed in more of democracy since Lipset; cent tests and Lewis-Beck, and Poole, Prze by Burkhart Londregan worski and Barro.45 and Limongi, The

second

control

variable

centage

of the states

gested

that states with

democratic tested

population

denotes

in 1970.46 Previous

large Muslim

than non-Muslim Islam

is Islam, which

populations

states.47 Of

the Muslim studies

have

per sug

tend to be less

all the religious categories the same data set)

the same way with

(measured by Barro, on a had by far the largest and most influence statistically significant states Islam in this model has special importance regime type.48 Placing 43 Here

I am following the practice of John B. Londregan and Keith T. Poole, "Does High Income Promote Democracy?" World Politics 49 (October 1996). 44 are similar to the indicators used and by Leite Oz/and Minerals (fn. 3,1995) by Sachs andWarner andWeidmann (fn. 3) in their studies of the influence of resource wealth on economic performance. While and agricultural goods into a single vari Sachs andWarner combine fuels, nonfuel minerals, able, I consider them as separate variables to see if their regression coefficients (and hence their influ ence on regime types) differ. 45 S. Lewis-Beck The (fn. 38); Ross E. Burkhart and Michael Lipset "Comparative Democracy: Economic Development 88 (December Thesis," American Political Science Review 1994); Londregan and Limongi and Poole (fn. 43); Przeworski (fn. 2); Barro (fn. 13). 46 In virtually all cases, the figure for 1980 (the only other year for which data were available) was identical to the 1970 figure. 47 of Democracy Salame (fn. 22); Seymour Martin Lipset,"The Social Requisites Revisited," Ameri can 59 (Februaryl994); Manus Midlarsky, for "Democracy and Islam: Implications Sociological Review Civilizational Conflict and the Democratic Peace," International Studies Quarterly 42 (December 1998). 48 Barro (fn. 13). Observers offer different arguments to explain the negative correlation between Sharabi, Neopatriarchy: A Theory (-.38). See, for example, Hisham democracy and Islamic populations inArab Society (New York: Oxford University Press, 1988); Bernard Lewis, "Islam ofDistorted Change 271 (February 1993); and Michael Hudson, "The Political and Liberal Democracy," Atlantic Monthly to Arab Democratization: Culture Approach It Back In, Carefully," in Brynen, The Case for Bringing are (fn. 36). Although they negatively correlated for the period covered by this data Korany, and Noble set (1971-97), it is not obvious that they will continue to be negatively correlated in the future. Two

DOES OIL HINDER DEMOCRACY? because

many

states with

great mineral

wealth

339

also have

large Muslim

populations, not only in theMiddle East but also in parts of Asia (In donesia, Malaysia, Brunei) andAfrica (Nigeria). The simple correlation between Oil and Islam is 0.44. The third control variable is OECD, a dummy that is coded 1 for that are members of the Organization for Economic newer members Mexico and Development (excluding researchers have found Korea) and 0 for all others. Previous states

Coopera and South

tion

that the ad

vanced industrialized states of the OECD are significantly more likely to be democratic

II era than

in the War post-World even after the influence

veloping world, for.49 There accounted

is no consensus

of income on

why

the states of the de and other

factors

are

this is so. It has variously

s unique historical trajectory;50 the cultural

been attributed to theWest

influence of Protestantism;51 the residual effects ofWestern colonialism on non-Western a "world the states;52 and system" that constrains states in of non-Western the any prospects "periphery."53 Conceivably antidemocratic effects from Oil and Minerals be spurious and might states and mineral-exporting The OECD dummy helps account for any of a on the mech effects, without position taking

reflect the location merely in the non-Western world. these Western-specific

of most

fuel-

anisms behind it. The

fourth

control

variable

is

Regimet5,

which

is the dependent

vari

able lagged by five years. Placing it on the right-hand side of themodel on a state s the most influence First, purposes. important own regime type may often be its peculiar history; Regimef5 helps cap or cultural ture any historical features that may be country-specific missed the other variables. Second, by right-hand-side including has

three

turn the into a change model, transforming helps equation Regime in a variable from regime type to the change the dependent country's over a ensure that the re regime type given five-year period. This helps

states with large Islamic populations, Nigeria and Indonesia, have recently moved toward democracy, and some of the most important prodemocracy forces in other Islamic states (including Algeria, Egypt, are often classified as Islamic "traditionalists" or "fundamentalists." It is instruc Jordan, and Malaysia) tive to recall that until the "third wave" of democratization and began in the mid-1970s, democracy were Catholicism correlated. negatively 49 and Poole (fn. 43); Przeworski and Limongi See Burkhart and Lewis-Beck (fn. 45); Londregan (fn.2). 50 See Moore (fn. 28). 51 See Lipset (fn. 38); Huntington (fn. 10). 52 and Opposition (New Haven: Yale University See Robert A. Dahl, Polyarchy: Participation Press,

1971). 53

The Modern See Immanuel Wallerstein, and Lewis-Beck (fn. 45).

(fn. 15); Burkhart

World-System

(New York: Academic

Press,

1974); Bollen

WORLD POLITICS

340 gression

will

indeed

measure

both

time-series

and

cross-sectional

changes in regime types.Third, Regime 5helps address the problem of serial

correlation

tional

data

that

to bedevil

tends

pooled

time-series

cross-sec

sets.54

one includes a set of twenty-six Finally, dummy variables, for each year covered by the data (1971-97), auto less one to mitigate are to correlation. These ef capture two types of time-specific designed the model

fects.The first is the coldwar, which may have blocked many transitions to states at second are contagion effects that influenced democracy. The different times in Southern and Eastern Latin and America, Europe, to to sub-Saharan Africa, where early transitions democracy appeared states. boost the likelihood of subsequent in transitions proximate run with a feasible tests were The process generalized least-squares using

Stata

6.0.55

Since

I include

side of the equation,

a

lagged dependent I correct for first-order

variable

on

the

autocorrelation

right-hand a allows the degree of autocorrela process, which using panel-specific tion to vary from country to country. I use a and control variables. The five-year lag for all independent lag more confidence arrow is that the in the right di causal gives pointing im rection; it also enables me to look for factors that have an enduring on not pact regime types. As I illustrate below, using shorter lags does the results of the it basic but does increase the absolute model, change

value of the coefficient of the lagged dependent variable relative to the other

explanatory

variables.

rent

regime type becomes in the previous year, while

Hence

with

overwhelmingly the influence

a one-year a lag, country's a function of its regime of other

variables

cur

type is artificially

suppressed.56

Results For the basic model country-year observations

described below, Stata is able to utilize 2,183

observations from

from

158 states. The

states, out of a possible 3,752 data for each of the variables are sum 113

marized inAppendix 2. 54 James A. Stimson, "Regression in Space and Time: A Statistical Essay,"American JournalofPolit icalScience 29 (November 1985); Nathaniel Beck and Jonathan N. Katz, "What to Do (and Not to Do) with Time-Series Cross-Section Data," American Political Science Review 89 (September 1995). 55 Beck and Katz (fn. 54) recommend using ordinary least squares with "panel-corrected standard errors" when working with panel data if the number of units is less than the number of time points. In this data set the number of units (113) exceeds the number of time points (27). 56 Variables Can Suppress the Explanatory Power "Why Lagged Dependent Christopher H. Achen, of Other Independent Variables" (Paper presented at the annual meeting of the Political Methodology Section of the American Los Angeles, Political Science Association, July 20-22,2000).

DOES OIL HINDER DEMOCRACY?

341

3 Table and Democracy3 Wealth is regime) variable (dependent

Resource

.253***

Regime

(.0203)

Oil

(.0051) (.00778)

(.00317)

.922***

.119***

(.00506) -.0438***

(.0081) .935***

-.0031***

(.00208)

.176*

(.308)

(.00543) -.0455***

(.00804) .965***

(.107)

-.0178***

-.0173***

(.0021)

(.000665)

1.47***

-.0393***

(.106)

(.0342)

-.018***

OECD

-.0339***

-.00718*

(.105) Islam

.246***

(.0204)

(.0024)

-.0459***

Income (log)

.25***

(.0203)

-.0078***

-.0346***

Minerals

.894***

(.00846)

1.42***

(.305)

(.0781)

Food

(.00211) 1.44***

(.308)

.0244*

(.0102) .042

Agriculture

(.0239) Observations States 113 Log likelihood

2498 115 -3283

2183 -3133

2182 113 -3129

2178 113 -3123

*

** *** at the 0.001 at the 0.05 level; at the 0.01 level; level significant significant significant are entered with in column aAll and control variables five-year lags, except independent are entered with a one-year errors are in Standard below the 2, where they lag. parentheses run with Stata Least corrected coefficients. Feasible Generalized 6.0; Squares regressions a is run with Each for first-order autocorrelation process. regression using panel-specific dummy

variables

for every

year

(but one)

covered

by

the data.

The results of the basic model are reported inTable 3, column 1.All of the variables are highly significant with the expected signs.57Both effects; these effects are of is some theMinerals coefficient

Oz/and Minerals

antidemocratic

roughly what larger.58

although

have strong the same magnitude,

57 Most

of the coefficients for the year dummies are also significant: for years 1971-89 the coefficients not sig negative and range from marginally to highly significant, for 1990 the coefficient is negative but nificant, and for years 1991-96 the coefficients are positive, although all but one (1994) are not significant. 58 These results were unaffected by the inclusion of other variables that are sometimes significant in status as a former British colony, Catholic attainment, including educational democracy regressions, run with a random the last variable was significant. When and trade openness. Only population, run with a fixed test produces a chi2 of 466 and a P value of 0.000. When effects process, aHausman for the lagged dependent effects process, however, none of the right-hand-side variables?except variable and Log Income?are significant. are

342 WORLD POLITICS -2

H

'So -1

0

-

-F-1-1-1-,-1

200 10 Value

of Oil Exports

30 (U.S. Dollars,

50

Billion

40

per Year)

Figure 1 Impact of Oil Exports on Regime a This

on the 0-10 variable a shows the net predicted impact of oil exports Regime, for a per capita income of $1,720 dollars a year, which of million with country twenty hypothetical people is the sample mean. Note the scale on the Y-axis is negative. figure

of oil and that the antidemocratic suggest properties a are substantial: standard deviation rise in the single a .49 over the in the 0-10 democracy index produces drop

The

results

mineral

wealth

Oil variable

five-year period, while leads to a .27 drop. A

a standard state

that

deviation is highly

rise in theMinerals reliant

1995 level ofAngola, Nigeria, or Kuwait?would scale due

democracy

on mineral

to its oil wealth

alone. A

variable

on oil exports?at

the

lose 1.5 points on the

state that was

equally

de

lose 2.1 points. that the impact of any new oil or however, implies, mineral wealth may be partly offset by a rise in income. To complicate on is nonlinear, and the the influence of Oil andMinerals matters, Regime on the state's of level of their income.59 prior magnitude impact depends pendent The model

exports would

also

As Figure 1 shows, the marginal influence of Oil on Regime is larger

and it drops oil exports are a small fraction of the economy, Barro and Przeworski reliant on oil. While country grows more

when

imply

that oil wealth

matters

only when

59 These effects occur because Income is entered an oil discovery will influence both the numerator

exports

reach

as the et al.

extraordinarily

in the model as a logarithmic function and because and the denominator in the Oil variable.

DOES -2

OIL HINDER

343

DEMOCRACY?

11

yj

,-,-,-,-,-,-!

0 5000

10000

Initial per Capita

Income

Figure Impact

of

$10 Billion

Rise

Annual

20000

15000

per Capita

30000

25000

(U.S. Dollars)

2

in Oil

Exports

on

Regime,

by Initial

Income

aThis figure shows the net predicted impact of a $10 billion rise in oil exports on the 0-10 variable of twenty million, country with a population by initial per capita income, for a hypothetical Regime, with no prior oil exports. Note the scale on the Y-axis is negative.

high

levels,

this test more

in

democracy test also The

suggests

the opposite: barrel for barrel, ones. countries than in oil-rich

oil harms

oil-poor cause greater dam implies that oil and mineral wealth ones to in in countries than rich 2). (see Figure age poor democracy a a income is whose the $800 per country Imagine capita year?about a level of Chad, Mozambique, and Yemen?with of twenty population an oil field that million and no oil exports. find prospectors Suppose of petroleum is exported. each year, all of which $10 billion produces The

new

oil would

boost per capita income (a prode simultaneously raise the Oil variable antidemocratic (an effect). The model that after five years the government would become predicts on the 0-10 less democratic, scale. A com losing about .93 democracy a state whose in income was initial per capita parable discovery if mean?would lose .54 the $1,720?the per capita in sample points; mocratic

effect)

and

come were $8,000?about same the level of Mexico and Malaysia?the oil field would be associated with a drop of just .16 in This pat Regime. tern is consistent with the observation that large oil discoveries appear

344

WORLD

to have no discernible

POLITICS

antidemocratic

effects

and the U.S., states, such as Norway, Britain, in countries. lize democracy poorer

in advanced but may

industrialized or destabi

harm

how general and robust these effects are, I carry out tests. First, to see whether the results are sensitive to the duration of the lag on the right-hand-side I run the same variables, on model all the explanatory variables (Table 3, col using one-year lags To

determine

five additional

umn 2). All of the variables remain significant, although the absolute on the lagged

of the coefficient

value

the absolute

regime type variable grows, and on the other of the coefficients

values and significance are reduced, perhaps artificially.60 to see whether other types of commodity Next, to the model: I add two variables democratization,

variables

sures the value

of all food

measures

the value

which

exports also inhibit Food, which mea of GDP, and Agriculture,

exports as a fraction of all nonfood agricultural

exports

as a frac

tion of GDP.As columns 3 and 4 of Table 3 show, the coefficients on Food andAgriculture are both positive?unlike Oil andMinerals, which are are consistent negative. These findings oil and other minerals impede democracy,

with

the rentier

but other primary less export produce

few or no rents, a larger fraction of the labor force?do

ties?which

generate the state, and employ

state thesis: commodi income

for

not.

The third test is designed to seewhether the model is heavily influ

enced most

of small states in the sample. Some by the inclusion on oil have small including populations, dependent

of the states Brunei

and

the Persian Gulf states of Bahrain, Kuwait, Qatar, and theUnited Arab Emirates; itwould not be surprising if they had a large influence on the magnitude and significance of the Oil variable. To determine this, I placed a dummy variable, Large States, in the model; itwas coded 0 if a states

was

population

below

one million

and

1 otherwise.

The

results

are displayed inTable 4, column 1.The coefficient on the population dummy is positive and significant at the 0.05 level, indicating that small

states do tend

sion has only

a

tiny

to be less democratic influence

on the Oil

than large ones; yet its inclu and Minerals coefficients and

leaves them highly significant. The Minerals tization

at whether the apparent effects of Oil and or historical to democra cultural by impediments are to that the Middle East and sub-Saharan Africa, specific

fourth

test

two

regions where variables dummy 60

looks

are caused

See Achen

(fn. 56).

these

states are most

to the regression,

I add two heavily concentrated. Mideast and SSAfrica, which were

DOES

OIL HINDER

345

DEMOCRACY? 4

Table

and Democracy51 Wealth variable is regime) (dependent

Resource

.255***

.209***

.227***

(.0203)

(.0205)

(.0203)

Regime

Oil

-.0333***

Minerals

(.00512)

-.0439**

-.0336***

(.00718)

.947***

.789***

(.105) Islam

-.0178***

OECD

1.41***

(.00761) .895***

(.117)

(.112)

-.00538

(.00209)

-.013***

(.0033)

(.00238)

1.6***

(.306) States

(.00557)

-.0265***

(.00802) Income (log)

Large

-.0138*

-.0209***

(.00511)

1.39***

(.31)

(.286)

.828*

(.406) Mideast

-3.65***

(.386) SSAfrica

-.998**

-1.62***

(.194)

(.2) Arabian

Peninsula

-3.74***

(.49) 2183 2183 2183 113 113 113 States -3133 -3086 -3100 likelihood Log * ** *** significant at the 0.05 level; significant at the 0.01 level; significant at the 0.001 level

Observations

aAll are

and

independent

in

parentheses run with Stata 6.0;

Each

control

below

corrected

is run with

regression

variables

the coefficients.

are entered Feasible

for first-order dummy

variables

with

Generalized

errors lags. Standard five-year Least regressions Squares

autocorrelation for every year

using

process. panel-specific covered by the data.

(but one)

coded 1 if the states were classified by theWorld Bank as residing in the lagged dependent variable these regions and 0 otherwise. While control

helps

for unspecified as summarized

crudely

be

SSAfrica

test for additional

effects?which country-level "the country's history"?Mideast or "the effects, regions region-level

might and history."

The results are listed in column 2 of Table 4. The coefficients for both Mideast and SSAfrica are large, negative, and highly significant. The

coefficients

on the 0*7 and Minerals

variables

are

again

reduced

but

remain highly significant. The Islam variable loses significance, due to its high correlation with theMideast variable (=.65).

WORLD POLITICS

346

For the final test, I use a new dummy, Arabian Peninsula, in place of theMideast dummy; itwas coded 1 for the seven states of theArabian Peninsula (Bahrain, Kuwait, Oman, Saudi Arabia, Qatar, the United Arab Emirates, andYemen) and 0 otherwise. Conceivably theMideast to capture the effects of is too broad, since it attempts residing dummy in a region that is socially and geologically diverse. The antidemocratic to the Arabian Penin effects of oil might be somewhat more restricted is dominated

sula, which

by monarchies,

sparsely

and en

populated,

dowed with spectacular oil wealth. Using Arabian Peninsula instead of Mideast

reduces

the problem

of collinearity

with

Islam,

although

Ara

bian Peninsula and Oil remain highly collinear (simple correlation =.74). Still, while including theArabian Peninsula dummy reduces the magnitude of the Oil coefficient by about 60 percent, Oil remains sig at the 0.05

nificant

These

level.

tests support both the validity and the generality of the oil

that a states re suggest the following: impedes-democracy claim.They on or to it make less democratic; either oil mineral liance exports tends

that this effect is not caused by other types of primary exports; that it is not

to the Arabian

limited

Peninsula,

to the Middle

East,

or to sub-Sa

haran Africa; and that it is not limited to small states.These findings are

consistent

generally

with

the theory

of the rentier

Area specialists might also feel vindicated

state.

in noting that in these

to include the vari democracy impediments and Arabian Peninsula, which represent the ac and cultural factors in each country, and in the that are not captured by in Arabian Peninsula and Mideast regions, or resource status. This underscores non-Western come, Islam, wealth, of case studies in explaining the critical importance regime types. tests

the most

powerful ables Mideast, Regimet? cumulation of historical

Causal Mechanisms To

test the three causal mechanisms variables,

intervening

lagged

a series of

I add to the basic model

one year. by Adding

new variables

reduces

the sample size from 2,183 observations to between 2,183 and 426 ob servations. ward

it becomes skewed to the sample shrinks, increasingly are and democratic, Western, wealthy, relatively a this problem, after sample bias. To minimize pronounced

As

states

that

introducing each running

the same

of the following reduced sample,

regressions, but without

I run a second

the intervening using If the intervening variable the two regressions. then compare and?if the Oil andMinerals should be statistically significant,

regression I variable. is valid, variables

it

DOES OIL HINDER DEMOCRACY?

347

are significant in the reduced sample?its inclusion should reduce the absolute values of the Oil andMinerals coefficients. This provides at least a crude

Rentier

test of some

of the causal mechanisms.

Effect

I use three indicators. For hypothesis, is the percentage the variable Taxes, which of revenue collected on taxes services, income, through goods, The effect taxation that states that capital gains. implies taxes selves through these assorted personal and corporate on more have higher values the Taxes variable) should be test the rentier

To

I use

effect

states

that

conversely, trade taxes, parastatals, be more authoritarian.

fund

grants, is constructed variable

by the International Monetary

government profits, and fund

them

(and hence

democratic; means other (such as through and right-of-way fees) should

themselves

external The

the taxation

from

data

collected

Fund and covers 104 of the 113 states

in the basic model. test

To measures cludes

the

I use Government

effect

which Consumption, as a of GDP; this in government percentage consumption all current spending for purchases of goods and services (includ spending

ingwages and salaries) by all levels of government. If the spending effect is valid, higher levels of government spending should result in less de mocracy. The data cover 104 states and are compiled by theWorld sta in turn collects from the OECD, national information Bank, which tistical organizations, central banks, andWorld Bank missions. is Government/GDP, third variable The which measures the share of GDP accounted in for by government 1985 international prices; activity, the data way

are from

to look that

Summers

and Heston.61

for a group-formation increase governments

as

This

final

effect.

Proponents (relative the formation

in size

imply are more to prevent they likely economy) are tions and social groups that independent that the absence of these groups will hinder

from

indicator of this

is one effect

to the domestic of civic

institu

the government, and to democracy.62

a transition

good indicators for civic institutions or social groups, this hy pothesis cannot be tested directly with regression analysis. Still, the

Without

an indirect

Government/GDPvariable

offers

(as a fraction cial groups will form.

of GDP),

ment's

size

test: the greater the govern so that independent

the less likely

61 "Penn World Robert and Alan Heston, Summers 5.6," http://cansim.epas. Tables, Version 1999 (consulted March 1,2000). utoronto.ca;5680/pwt/pwt.htm/, 62 Of course, a larger budget may not be the only cause of such government actions, but it is the only cause that can be linked to resource wealth in an obvious way.

348

WORLD

POLITICS

Table

5 Rentier Effect variable is regime) (dependent The

.259***

Regime

.243***

(.021)

Oil

(.0211)

-.0223***

(.0113)

(.00675)

.889***

.857***

(.104)

(.112)

(.106)

-.0165***

-.0191***

-.0161***

(.00218)

1.19***

(.00212)

1.57***

1.53***

(.314)

(.272) Taxes

-.0369***

(.00677)

(.00205) OECD

(.00511)

-.0463***

1.005***

Islam

-.0351***

(.00544)

-.0157

Income (log)

(.0203)

-.0323***

(.00647) Mineral

.251***

(.303)

.02***

(.00373) Government

-.0305***

(.00866)

Consumption

-.0332***

Government/GDP

1698 104 -2320

Observations States

Log likelihood *

(.00739) 2168 111 -3107

2121 110 -3036

*** at the 0.01 level; at the 0.001 level significant significant are entered with and variables variables control lags; intervening independent five-year are entered with (Taxes, Government Government/GDP) one-year lags. Stan Consumption, below the coefficients. Feasible Generalized Least dard errors are in parentheses Squares run with for first-order autocorrelation Stata 6.0; corrected using panel-specific regressions at the 0.05

significant

Each process. the data.

**

level;

is run with

regression

dummy

variables

for every

(but one)

year

covered

by

As Table 5 shows, the coefficient on Taxes is highly significant and positive: taxes are

as the rentier

effect

associated

implies, with more

and corporate higher personal More democratic government. a 17 in Oil the coef percent drop

strongly of Taxes produces over, the inclusion ficient, which implies that the taxation

effect may

the antidemocratic influence of Oil.63While also

runs

should

the other

be

way?that

in the opposite

63 The Minerals the mineral-exporting

account

type influences regime more direction: democratic

variable is not significant states.

in this sample, making

for part of

it is possible that causality

it difficult

taxation?it governments

to draw inferences

about

OIL HINDER

DOES

349

DEMOCRACY?

should be less disposed to fund themselves through personal and cor taxes, given their unpopularity. effect of taxes on regime types

porate The

term: when

Taxes

is introduced

into

out

turns

the model

to be

with

short strictly a two- or three

year lag, its coefficient quickly drops in size and loses significance. This that

implies

tend

people

tax increases to

respond

have only short-term effects on democracy: or to tax hikes not at all.64 right away

The Government Consumption variable is also highly significant in the hypothesized direction (Table 5, column 2).When Government Consumption is included in the model, Oil andMinerals drop slighdy, by 7 and 6 percent, respectively. The spending effect appears to last effect: the Government longer than the taxation has much the same effect on regime type after one. after These idence

results

variable

Consumption three years

as it does

are not

that regime

there is ev likely caused by endogeneity. While influences levels of government type consumption,

it is in the opposite direction found here: democratic governments tend to favor higher

levels of social

than

spending

their authoritarian

coun

terparts.65

Finally, Government/GDP is also highly significant with the hypothe sign: the larger the government, over the five years. mocracy following sized

the

less movement

Its inclusion

toward

has no effect

Oil variable but produces a 12 percent drop in theMinerals (Table 5, column 3). In short,

the results

are consistent

with

all three aspects

de

on the

variable

of the rentier

effect.

Repression I use

Effect

two variables

governments

causes to test the that resource wealth hypothesis more heavily against popular pressures.

to arm themselves

The first isMilitary/GNP, which measures the size of the military bud get as a fraction

of GNP. The

data were

Control andDisarmament Agency

originally

collected

by the Arms

(ACDA)of theU.S. government and

64 Note that other studies have found that a government's reliance on personal and corporate tax revenues is influenced by per capita income: poor states tend to rely on trade strongly and negatively taxes, rich ones on personal and corporate taxes. SeeWilliam Easterly and Sergio Rebelo, "Fiscal Pol icy and Economic Growth," fournal of 'Monetary Economics 32 (December 1993); Howell H. Zee, "Em World Development 24 (October 1996). Since per Tax Revenue Comparisons," pirics of Cross-Country the actual effect of Taxes on regime types is probably larger capita income is included in the model, than the coefficient in this regression suggests. 65 in Latin America, David and Wendy and Social Spending S. Brown Hunter, "Democracy 1999). 1980-92," American Political Science Review 93 (December

350 cover

WORLD POLITICS states between

101

1985

and

1995.66

Since

states

resource-rich

tend to have government budgets that are atypically large relative to the size of their economies, this is a better indicator than military spend as a fraction of government ing spending. is The second variable the size of Personnel, which measures Military a some as the military fraction of the labor force; it includes paramili tary forces

"if those

forces

training,

equipment,

resemble

or mission."

The

regular units in their organization, data are also from ACDA and are

available from 1985 to 1995 for 105 of the states in the database. Un like the this indicator helps measure, Military/GNP in military wages and the presence of conscription are Income When and Oil, Minerals, regressed

control across on

for variations states.

Military/GNP

di

recdy (with a five-year lag), the behavior of oil exporters and mineral exporters diverges. Oil exports are indeed positively and significantly correlated

with military

but mineral

exports

as the suggests; repression hypothesis associated with and significantly negatively

spending, are

military spending. Neither variable is significantly linkedwith Military Personnel.

When Military/GNP is placed in the basic model of regime types, its coefficient is negative andmarginally significant at the 0.10 level; its in clusion produces a 6 percent drop in the Oil coefficient (Table 6). The Military Personnel coefficient is negative and highly significant, al though it paradoxically induces a 7 percent rise in Oil. In both samples theMinerals coefficient is not significant and cannot be interpreted. Overall, it appears that oil wealth may be linked to higher levels of as the re in turn tends to spending, which impede democracy, of a similar pattern for effect suggests. But there is no evidence or nor to is evidence there wealth; support the claim that oil

military pression mineral

mineral wealth leads to higher levels of military personnel. do oil-rich governments Why Is it to repress popular militaries?

on their they do or is it a response to higher

as much

invest pressures,

as

levels of instability?To address this question I use data from the Polit

measures a uses to subjective Group, private firm that a 0-6 measure o? Eth risks for its clients. It produces gauge investment a nic Tensions, which measures "the degree of tension within country at ical Risk

tributable

Services

to racial,

nationality,

or

language

divisions."

Scores

are

available for 102 states between 1982 and 1997. Higher values indicate less ethnic 66 Since gressions

tension. When

added

to the model?first

the data cover only eleven years, the maximum to 1,642. drops from 3,752

number

of possible

separately, observations

then

for these re

DOES OIL HINDER DEMOCRACY? 6

Table The

Repression variable (dependent

Effect is regime)

.414***

Regime

.334***

(.032)

Oil

-.0679***

(.00566) .0169

Islam

(.00609)

-.00344

(.0179)

.848***

.822***

-.000964

(.0201) .824***

(.132)

(.145)

(.117)

-.0173***

-.0158***

-.0263***

(.00266) OECD

-.0517***

(.00632)

(.0272) Income (log)

.34***

(.0262)

(.0314)

-0591***

Minerals

351

(.00251)

(.00235) -.00168

-.071

(.332)

-.0957

(.355)

(.3)

-.0366

Military/GNP

(.0197) Military Personnel

-.09**

(.0304) Ethnic Tensions

-.0254

(.0485) 841 1167 874 101 States 105 102 -1293 -1642 -1228 likelihood Log * ** *** significant at the 0.05 level; significant at the 0.01 level; significant at the 0.001 level

Observations

aAll independent

and

control

ables

Military (Military/GNP, errors are in Standard parentheses regressions process. Each

Squares

specific ered by the data.

run with

are entered

variables Personnel,

Stata

regression

Ethnic

below

the

with

vari

five-year lags; intervening are entered with one-year coefficients. Feasible Generalized

Tensions)

for first-order 6.0; corrected is run with variables dummy

lags. Least

autocorrelation

using

for every year

(but one)

panel cov

together with Military/GNP, and finally controlling for ethnolinguistic is not statistically Ethnic Tensions variable signif In column other tensions caused by racial, na words, (Table 6, 3). so states do not explain why oil-rich tional, or language divisions spend on heavily repression. fractionalization?the icant

Modernization To mine

Effect

to deter I use eleven indicators hypothesis low levels of ed specialization, abnormally occupational can and urbanization health services, media participation, help

test the modernization whether

ucation,

352

WORLD POLITICS of democracy of indicators allows me

ernization

large of mod

s version

to test both versions

and earlier

theory

states. The

in the resource-rich

the dearth

explain number

Inglehart described by Lerner,

Deutsch,

and Lipset. to

and education Inglehart, occupational specialization measure links between economic growth and democracy. To at the number of men and women I in look occupational specialization as a sectors the economy's and (industrial) secondary tertiary (services) men women in the economically fraction of the and active population. According are the key

These

are drawn

data

from

the International

Labor

Organization

and

cover 76 of the 113 states used in the basic model. For

levels, I use figures on as a fraction in secondary school

educational

women

the enrollment

of men

of

the corresponding on college enrollment

at group in the population large and figures fraction of the population. Both data sets are collected

by national

and age as a gov

ernments and assembled by theUnited Nations Educational, Scientific, and Cultural available

(UNESCO). Figures countries; figures countries.

Organization for forty-eight

are available

for ninety-six

on on

enrollment secondary are enrollment college

of modernization that improve Early proponents theory suggested can also lead to democratiza ments in a populations health physical has argued that as a tion.67 More basic recently Inglehart populations turn nutritional and health needs are satisfied, will they increasingly a to for desire and values, "postmaterialist" including self-expression shift, in turn, will facilitate more dem ocratic government.68 Earlier scholars measured the quality of a popu I use lations health by using the number of doctors per capita. Here at birth, a measure life expectancy that also accounts for nutrition lev across of health services els and the distribution the population. The individual

freedom;

underlying

data

are

this value

compiled

by several UN

and cover ninety

agencies

states.

In Lipset's

classic

analysis,

the greater

a

society's

level of "media par

ticipation/' the more likely it is to be democratic.69 Lipset measured media

radios, and newspaper using telephones, participation copies per measure To these indicators both the number capita. slightly, I update on of telephone and televisions mainlines per capita. Data telephone are collected mainlines and televisions the International Telecom by 67 Daniel Lerner, The Passing 68 Inglehart (fn. 1). 69 Lipset (fn. 38).

of Traditional

Society (New York: Free Press,

1958); Deutsch

(fn. 38).

353

DOES OIL HINDER DEMOCRACY? 7

Table

Effect3 is regime)

The Modernization variable (dependent

.529***

.462***

.513***

.604***

(.0316) O? -.0182

(.0408)

(.0336)

(.0324)

Regime

-.116

(.0221) .146*

Minerals

Income (log)

(.0666) -.251

Islam

-.0121

(.305) (.0082) OECD

in

Women

?

(.271)

(.343)

(.344)

-.0232***

-.000534

(.372)

(.419)

?

?

(.0166) ? .0685***

?

(.0155)

Services in

Women

.391

1.13**

?

in

(.0104)

(.00652)

(.00545)

.0814***

Industry Men

3.8

-.0154**

(.432)

.0733*

(.0714)

(.0657) -.408

.565*

(.419) (.0143)

(.0234) .115

(.0207) .0952

(.0635)

.652

in

-.0315

-.0187

(.0202) .112

.752*

Industry

Men

4

3

12

?

?

?

-.0185***

(.00512)

Services

States 75

***

**

*

-921

-835

-772

Log likelihood_-878

629 76

622 76

615 75

626

Observations

at the 0.01 level; at the 0.001 at the 0.05 level; level significant significant significant are entered with vari aAll and control variables intervening five-year lags; independent are entered in Services) Men in in Services, Women ables {Men in Industry, Women Industry, are errors in Feasible Gen below the coefficients. Standard with one-year parentheses lags. run with autocorrela for first-order Stata 6.0; corrected eralized Least Squares regressions for every is run with variables Each tion using panel-specific process. regression dummy year (but one) covered by the data.

munications tively,

Union

and are available

and cover virtually

all country

for years

113

and

110

in the data

states, set.

respec

Finally, Lipset also suggested that higher levels of urbanization will I use the To measure urbanization levels of democracy. lead to higher in urban areas. The data, of a state's population currently living

fraction

collected by theUnited Nations, are available for all 113 states. The

results

from

these

regressions

are

reported

in Tables

7, 8, and 9.

All of the variables measuring occupational specialization are highly

WORLD POLITICS

354

Table

8

The Modernization variable (dependent

.378***

.378***

(.0449)

(.0451)

Regime

Oil

Effect is regime)

-.0158

Minerals

-.0168

-.033***

(.00966) .0251

(.00952) .0255

(.00991) .0517

(.0431)

(.0433)

(.0325)

Income (log)

.258

Islam

.34***

(.0334)

.364

.678***

(.296)

(.29)

(.19)

-.0393***

-.0385***

-.0348***

(.00507) OECD

(.00479)

.159

.187

(.345)

(.336)

Male Secondary

(.00407) -.0759

(.436)

.004

Enrollment

(.00856) .000812

Female

Secondary Enrollment

(.00882)

College Enrollment

-.00289

(.0105) 426 48

Observations States

688 96

426 48

-566 -563 -1109 Log likelihood * ** *** significant at the 0.05 level; significant at the 0.01 level; significant at the 0.001 level aAll independent ables

(Male

tered with

Secondary one-year Least

Generalized

and

control

variables

Enrollment,

Female

lags. Standard

errors

are entered

using

every year

significant

and positively of modernization

proponents wealth influence

five-year

lags;

vari

intervening

are en

Secondary College Enrollment) are in below the coefficients. Feasible parentheses run with auto for first-order Stata 6.0; corrected

Squares regressions Each process. panel-specific (but one) covered by the data.

correlation

with

Enrollment,

associated

regression

with

theory. The

is run with

dummy

variables

for

as democracy, by predicted evidence that oil and mineral

is somewhat however, occupational specialization, variables measuring Ufe expectancy, urbaniza education, are measure not and while televisions the of tion, per capita significant,

weak.70

The

70 is significantly in these reduced samples, Oil nor Minerals Neither correlated with democracy are on each which makes it hard to be confident about these results.When Oil anaMinerals regressed of the four variables for occupational (with Income and Islam included as control vari specialization in Industry but positively correlated ables), the results are mixed: Oil is negatively correlated with Men with Women in Industry; Minerals is not significantly correlated with Men in Industry and is negatively, but weakly, linked to Women in Industry.

DOES OIL HINDER DEMOCRACY? Table

355

9

The Modernization variable (dependent

Effect is regime) 4

Regime

.194***

.196***

.413***

.253***

(.0232)

(.0225)

(.0516) .0247

(.0203)

Oil

-.0463***

Minerals

-.00929

-.04***

(.00609)

Income (log)

(.00551)

(.016)

(.0152) .882***

(.119)

(.134)

Islam

-.0194***

-.023***

OECD

2.96***

Telephones

-.00543**

(.00214)

(.00509) -.0441***

(.0605)

(.008)

1.07***

.983***

(.315)

(.149)

-.0104

(.00231)

-.0174***

(.0168)

(.00213)

-.041

1.75***

(.351)

(.482)

(.039) -.0376

-.0085

1.24***

-.0346***

1.51***

(.31)

(.412)

(.00118) TVs

-.00096

(.00079) Life

.00378 (.0616)

Expectancy Urban

-.00278

1830 113 -2830

Observations

1831 110 -2676

(.005) 2183 113

777

103 -3133 -857 likelihood Log * ** *** significant at the 0.001 level significant at the 0.05 level; significant at the 0.01 level; States

are entered with vari and control variables five-year lags; intervening er are entered with Urban) one-year lags. Standard {Telephones, TVs, Life Expectancy, rors are in Least below the coefficients. Feasible Generalized parentheses Squares run with for first-order S tata 6.0; corrected autocorrelation regressions using panel-specific is run with for every year (but one) covered by variables Each process. regression dummy the data. aAll independent

ables

telephones per capita is highly significant but negatively correlatedwith democracy. are at least two ways to There interpret these results. One valid but that occupational modernization effect is essentially is the only real causal mechanism behind it, with A second relates of modernization being epiphenomenal. countries both the modernization is that in resource-rich ization

spending into the

effect industry

occur and

simultaneously: service sectors;

is that the

special the other cor interpretation effect and the

are drawn few people relatively to its thanks yet large revenues,

356

WORLD POLITICS

the government other services. The ices yet

can

is politically

subsidize health care, and education, generously result is that the public enjoys generous social serv two antidemocratic forces: a lack of hampered by

and a government that uses its fiscal powers occupational specialization to dissent. dampen consistent The results of these tests are at least weakly with each of the three causal mechanisms. Collectively, they provide quantitative

backing for the rentier effects described by a generation ofMideast in the case

for the repression effects observed specialists, and for a modified form of the modernization on data that are rely incomplete sults should be treated as suggestive,

tests

thesis.

and potentially not conclusive.

studies

above, the causality so the re biased,

Still,

Conclusion This

article

has four main

findings.

First,

the oil-impedes-democracy

claim is both valid and statistically robust; in other words, oil does hurt to in poor oil does greater damage democracy. Moreover, democracy states than in rich ones, and a given rise in oil exports will do more harm ones. Hence, states than in oil-rich in oil inhibits democracy oil-poor even when are in poor states. exports relatively small, particularly

Second, the harmful influence of oil is not restricted to theMiddle East.

Oil wealth has probably made democratization harder it may well like Indonesia, Malaysia, and Nigeria; Mexico, same affect on the oil-rich states of Central Asia.

The

in states have

the

third finding is that nonfiiel mineral wealth also impedes de

mocratization.

While

the major

mineral

Mideast, exporters major the Americas; this group includes

oil exporters are scattered many

are concentrated

in the

across Africa, Asia, and states where toward progress

democracy has been halting or elusive, including Angola, Chile, the Democratic Each scholars

of Congo, Republic runs of these findings that the antidemocratic

and Peru. Cambodia, counter to the of earlier assumptions effects of oil?if they existed?were

states that were East, that they influenced only on oil, and that not extend to the did wholly they dependent states. mineral-rich restricted

to the Middle

almost

is that there is at least tentative The fourth finding that link oil and authoritarianism: causal mechanisms through dampen

support for three a rentier effect,

use low tax rates and to governments high spending a for democracy; effect, by which govern pressures repression

which

ments build up their internal security forces to ward off democratic

357

DOES OIL HINDER DEMOCRACY? and a modernization pressures; move into industrial lation to to likely push thoritarianism from

the failure of the popu effect, in which and service sector jobs renders them less The links between mineral wealth and au

for democracy. are more elusive:

a rentier

effect

a

but not

that they are afflicted

evidence

appear to suffer exporters effect, and there is only weak

the mineral

repression a by modernization

effect.

Collectively, these findings should help vindicate two very different theories

of comparative politics: modernization out of favor in the 1970s and 1980s made

falling

after theory, which a strong comeback in

the 1990s; and the theory of the rentier state, which has long been championed byMiddle East area specialists but overlooked by scholars of democratization.

They also highlight the value of bringing cross-national quantitative contact

into closer

studies

with

area studies. Global

studies

of democ

racy have generally overlooked theMideast, a practice that is difficult to justifymethodologically (since it arbitrarily truncates the researcher s sample of states) and one that has contributed to a belief that theMid and culture of the region is sui generis. Of course, the history on the Mideast are note the enormous coefficient exceptional:

dle East Mideast

dummy variable inTable 4. But excluding Middle

Eastern states from

area the gap between only widen science. It also deprives mainstream po area studies scholars? litical science of the many insights developed by that, like the oil-impedes-democracy claim, may turn out to insights have general applications. of democracy large-N studies and the rest of political studies

can

Finally, these findings have implications for the fate of resource-rich states

across

the developing

world.

of the world

Many

smost

troubled

states have high levels of oil and mineral wealth. Earlier studies have shown

that resource wealth

tends

to reduce

economic

growth

and to in

crease the likelihood of civil war. This article suggests there is a third to "resource curse": authoritarian rule. component a "re interact in pernicious three effects may These ways, creating source may be less able to resolve do governments trap." Authoritarian to suffer from civil war. Slow likely unrest to resolve; civil wars, in domestic tougher growth may make is nothing economic havoc. There inevitable about the re turn, wreak

mestic

source

conflicts

curse:

and hence

states

more

like Malaysia,

Chile,

and Botswana

have done

rela

tively well despite their oil and mineral wealth. Yet most others have found?like pected

source

King Midas?that of grief.

their

resource wealth

can be an unex

358

WORLD

Appendix is a 0-10

Regime

variable

POLITICS

of Variables71

1:Definition indicating

a

country's

regime

type, with

0 as a

perfect autocracy and 10 a full democracy. It is taken from the Polity 98 a 0-10 indicator for by Gurr and Jaggers, who assign compiled level of autocracy and level of democracy.72 Each is a composite of measure are re the chief variables that executives way underlying office elections, cruited, whether they gain through competitive set

data

both

whether

are executive office, and whether may obtain they actors. other and accountable to, by, Following Londregan I transform into a single indicator by these two measures

nonelites

constrained and Poole,

from the democracy measure and by the autocracy measure to 10 scale as a 0 to 10 scale.73 For the six -10 the resulting rescaling states with for which Gurr than one million and greater populations subtracting

Jaggers

offer

no

indicators

(Austria,

Cameroon,

Democratic

Republic

of Congo, Libya, Sierra Leone, and Switzerland), I use data from Free dom House (1972-98) instead, summing their measures for "political and converting the results to the 0-10 scale. Income is the natural log of real per capita GDP, in current inter Log of the data come from Summers and Heston; national dollars. Most rights"

and "civil liberties"

missing values have been imputed using data from theWorld Oil

Bank.74

of GDP. fuels as a percentage natural gas, and coal, as classi 3. Following of Sachs the practice

is the export value of mineral-based Mineral-based fuels include petroleum, SITC revision

1, section I corrected andWarner, the export figures to reflect net exports, since both states are

fied

under

materials

extracted

in nearby

states.75 The

for

Singapore

and Trinidad

raw transshipment points for values for both states were

set at 0.01. as a is the export value of nonfiiel minerals of percentage ores sec SITC revision it under includes all and metals classified GDP; 1, I cor tions 27,28, and 68. Following the practice of Sachs andWarner, Minerals

rected the export figures for Singapore and Trinidad exports, tracted

since both in nearby

states are states.76 The

transshipment points values for both states were

71 Unless otherwise indicated, the data below were derived from World Bank, 1999). Indicators," CDHROM (Washington, D.C.: World 72 Gurr and Jaggers (fn. 42) 73 and Poole (fn. 43). 74Londregan Summers and Heston (fh. 61). 75 Sachs andWarner (fh. 3,1999). 76 Ibid.

to reflect net

for raw materials

Bank,

ex

set at 0.01.

"World Development

DOES OIL HINDER DEMOCRACY?

359

Islam is the percentage of the population whose professed religious affiliation in 1970 was Muslim.77 OECDis a dummy variable coded 1 for the following states and 0 for all others:

Australia,

Austria,

Canada, Denmark, Finland, Belgium, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, New Netherlands, Zealand, Sweden, Norway, Portugal, Spain,

Switzerland, United Kingdom, United States. is the export value Agriculture a as of GDP. This als, percentage

raw materi

of all nonfood includes

agricultural all commodities

as

classified

falling in SITCrevision 1, section 2 (excluding divisions 22,27, and 28). Food

is the export

value

of all edible

commodities,

agricultural

as a

percentage of GDP.This includes all commodities classified as falling in SITC sections Large

22. 0,1, and 4, and division a States is dummy variable coded

1 for states with

populations

over one million at any point between 1971 and 1997, and 0 otherwise. Mideast is a dummy variable coded 1 for the following states and 0 otherwise: Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Algeria, Egypt, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, Libya, Syria, Tunisia, United Arab Emirates, and Yemen.

a SSAfrica is dummy variable coded 1 for states classified by the World Bank as residing in sub-Saharan Africa and 0 otherwise. Arabian

Peninsula

is a dummy

variable

coded

1 for the states on the

Saudi Arabian peninsula (Bahrain, Kuwait, Oman, Saudi Arabia, Qatar, theUnited Arab Emirates, andYemen) and 0 otherwise. Men in Industry and Women in Industry indicate the fraction of the totalworking population of each gender group working in activities de fined by the ILOas "industry."This includes mining and quarrying (in cluding oil production), manufacturing, to construction, major corresponding

electricity, divisions 2-5

ILO as "services." Services by the and hotels; and restaurants transport,

include wholesale

and and water, revision 2) or (iSIC

gas

tabulation categories C-F (iSIC revision 3). The data are compiled by theWorld Banks Development Data Group using an ILOdatabase cor responding to table 2a in its Yearbook ofLabour Statistics. Men in Services and Women in Services indicate the fraction of the totalworking population of each gender group working in activities de

fined

insurance, nancing, social, and personal 77 David

B Barrett,

real estate, services,

and retail trade

fi storage, and communications; and business services; and community,

corresponding

ed., World Christian Encyclopedia

to

major

(New York: Oxford

divisions

University

6-9

Press,

(ISIC 1982).

WORLD POLITICS

360

revision 2) or tabulation categories G-P (ISICrevision 3). The data are compiled by theWorld Banks Development Data Group using an ILO to table 2a in its Yearbook Labour Statistics. corresponding of Enrollment and Female Enrollment indicate Secondary Secondary the fraction of males in secondary and females enrolled school, relative

database Male

to their numbers

in the population.

The

data are reported

to the United

Nations Educational, Scientific, and Cultural Organization by national

(UNESCO)

authorities.

education

CollegeEnrollment indicates the fraction of the population enrolled in data are reported

college. The ties.

to UNESCO

by national

education

authori

Life Expectancy indicates the life expectancy at birth of both males and females. The underlying figures are from the United Nations Depart ment of Economic and Social Affairs, Population andVital Statistics Re and health

port; demographic

from national

surveys

sources;

and United

Nations Children's Fund (UNICEF), The State of theWorld'sChildren, 1999. Urban

is the midyear population to the United and reported

country

of areas defined Nations,

as urban

in each

as a fraction

expressed

of

the total population. The data are from from theUnited Nations, World Urbanization Telephones

The 1996 Revision. Prospects: is the number of telephone

mainlines

(that

is, separate

lines to a given household or firm) per thousand people. The data are derived from the International Telecommunication Union (ITU),World Telecommunication TVs

Development Report. is the number of televisions per

an annual

sent to member

thousand countries

questionnaire from the ITU, World Telecommunication revenue is the percentage of government

are derived Taxes on

goods,

services,

income,

lected by the IMF.

profits,

and capital

to people, according ITU.The data the by Development Report. taxes raised through

gains. The

data

are col

as a percentage of GDP, includes expressed Consumption, "all current expenditures for purchases of goods and services by all lev most government els of government, It also in excluding enterprises. on national cludes capital defense and expenditure security." The data are collected from the OECD and from national statistical organizations Government

and central banks by visiting and residentWorld are published by theWorld Bank. Government/GDP

is the

share of GDP accounted

Bank missions; they for by government

activity, in 1985 international prices. The data are from the PennWorld Tables. Military/GNP

measures

the size of the military

budget

as a fraction

of

DOES OIL HINDER DEMOCRACY?

361

GNP.The data cover 1985-95; theywere originally collected by theArms Control andDisarmament Agency (ACDA)of theU.S. government. as a percentage Personnel measures the size of the military Military some of the labor force; it includes "if those forces forces paramilitary or in units resemble their training, regular organization, equipment, mission." Ethnic gree

The

data are also from ACDA and cover

Tensions

of tension

is a 0-6

within

a

interval-level country

attributable

1985-95. that measures

variable

to racial,

"the de or

nationality,

language divisions." The data cover 97 states between 1982 and 1997; the codings are carried out by a private firm, the Political Risk Services Group, and published in their monthly International Country Risk are also available as the IRIS-3 computer The database. they mean into the data have been annual data by taking monthly changed of the twelve monthly values. Guide;

2: Appendix of Variables

Summary Variable

Log Income Minerals

Agriculture Men in Industry Women in Industry Men in Services Women in Services Male Secondary Female Secondary College Life Expectancy Telephones

Govt. Consumption Government/GDP Military/GNP Military Personnel Ethnic Tensions

Obs.

3752 Regime 3316 2322 Oil 2865 OECD 4528 4336 Islam Food 2511 2504 814 798 810 813 607 607 1272 4372 Urban 1527 3129 TVs 3040 Taxes 2325 3538 2277 1298 1440 1739

Mean

Std. Dev.

Min

0 4.48 3.79 1.2 7.45 4.53 14.1 5.5 115.60 055.1 5.8 2.25 .369 0 .163 36.6 0 25 6.23 45.9 0 5.73 1.68 031.6 2.88 29.4 12.7 8.9950.2 0 15.5 14.3 39 5 52 910025.6 327.9 57.7 1.3 5829.9 16.9 16.9 46.1 100 25 2.24 31.2 11.7 62.5 106 154 169 0 838 151 101 0 18.7 50.9 15.2 6.51 0 11.9 23.8 0102 6.64 4.36 1.84 29.6 0 2.6 0 3.791 1.633

Max

10 10.43

1 99.7

.4

66.9 69.3

.1

98.6 98.5 97.7

.1

79.8 691

.897

76.2 91.2

6