Refining the Oil Curse: Country-Level Evidence from Exogenous Variations in Resource Income
Year: 2013
Type: preprint
Abstract: Is there a resource curse? One school of scholars argues that resource income is associated with slower transitions to democracy; others contend that the negative effects of resources are conditional on factors such as institutional quality. To test these competing hypotheses, this article exploits the price spike caused by the 1973 oil embargo, which transformed several countries with latent oil industries into resource-reliant states. Our quasi-experimental research design allows for better identification of causation than the associational approaches common in the literature. We use the method of synthetic controls to compare the political development of states that received resource-derived revenue with how these states would have behaved in a counterfactual world without such revenue. We find that there is little evidence that a resource curse systematically prevents democratization or that institutional quality alone determines outcomes. Nevertheless, resource income meaningfully affects outcomes and even contributes to democratization in some instances.
Source: SSRN Electronic Journal
Authors: Yu-Ming Liou, Paul Musgrave
Institution: Georgetown University
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3124314631