Some scholars suggest that the Middle East's oil wealth helps explain its failure to democratize. This article examines three aspects of this “oil impedes democracy” claim. First, is it true? Does oil have a consistendy antidemocratic effect on states, once other factors are accounted for? Second, can this claim be generalized? Is it true only in the Middle East or elsewhere as well? Is it true for other types of mineral wealth and other types of commodity wealth or only for oil? Finally, if oil does have antidemocratic properties, what is the causal mechanism?
The author uses pooled time-series cross-national data from 113 states between 1971 and 1997 to show that oil exports are strongly associated with authoritarian rule; that this effect is not limited to the Middle East; and that other types of mineral exports have a similar antidemocratic effect, while other types of commodity exports do not.
The author also tests three explanations for this pattern: a “rentier effect,” which suggests that resource-rich governments use low tax rates and patronage to dampen democratic pressures; a “repression effect,” which holds that resource wealth enables governments to strengthen their internal security forces and hence repress popular movements; and a “modernization effect,” which implies that growth that is based on the export of oil and minerals will fail to bring about die social and cultural changes that tend to produce democratic government. He finds at least limited support for all three effects.
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Case studies often conflate these three effects. I treat them here as separate mechanisms to clarify their logic.
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Oil and Minerals are similar to the indicators used by Sachs and Warner (fn. 3, 1995) and by Leite and Weidmann (fn. 3) in their studies of the influence of resource wealth on economic performance. While Sachs and Warner combine fuels, nonfuel minerals, and agricultural goods into a single variable, I consider them as separate variables to see if their regression coefficients (and hence their influence on regime types) differ.
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In virtually all cases, the figure for 1980 (the only other year for which data were available) was identical to the 1970 figure.
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See Burkhart and Lewis-Beck (fn. 45); Londregan and Poole (fn. 43); Przeworski and Limongi (fn. 2).
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Most of the coefficients for the year dummies ate also significant: for years 1971–89 the coefficients are negative and range from marginally to highly significant; for 1990 the coefficient is negative but not significant, and for years 1991–96 the coefficients are positive, although all but one (1994) are not significant.
These results were unaffected by the inclusion of other variables that are sometimes significant in democracy regressions, including educational attainment, status as a former British colony, Catholic population, and trade openness. Only the last variable was significant. When run with a random-effects process, a Hausman test produces a chi2 of 466 and a P value of 0.000. When run with a fixed-effects process, however, none of the right-hand-side variables—except for the lagged dependent variable and Log Income—are significant.
These effects occur because Income is entered in the model as a logarithmic function and because an oil discovery will influence both the numerator and the denominator in the Oil variable.
See Achen (fn. 56).
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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.
The Minerals variable is not significant in this sample, making it difficult to draw inferences about the mineral-exporting states.
Note that other studies have found that a government's reliance on personal and corporate tax revenues is strongly and negatively influenced by per capita income: poor states tend to rely on trade taxes, rich ones on personal and corporate taxes. See Easterly, William and Rebelo, Sergio, “Fiscal Policy and Economic Growth,” Journal of Monetary Economics 32 (December 1993)CrossRefGoogle Scholar; Zee, Howell H., “Empirics of Cross-Country Tax Revenue Comparisons,” World Development 24 (October 1996).CrossRefGoogle Scholar Since percapita income is included in the model, the actual effect of Taxes on regime types is probably larger than the coefficient in this regression suggests.
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Neither Oil nor Minerals is significantly correlated with democracy in these reduced samples, which makes it hard to be confident about these results. When Oil and Minerals are regressed on each of the four variables for occupational specialization (with Income and Islam included as control variables), the results are mixed: Oil is negatively correlated with Men in Industry but positively correlated with Women in Industry; Minerals is not significantly correlated with Men in Industry and is negatively, but weakly, linked to Women in Industry.
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