Michael Ross, UCLA ERF and AFESD conference on: Monetary and Fiscal Institutions in Resource-Rich Arab Economies Kuwait, November 4-5, 2015 For more info, please visit www.erf.org.eg Session on: Oil, Rents and Politics: Forty-five years after Hossein Mahdavy developed the modern concept of a “rentier state,” hundreds of studies have been conducted on the ways that oil wealth seems to influence governance. This session will give an overview of some key insights about state-building, development policies, accountability and conflict, particularly those that cast light on the oil-rich Arab states during a period of low prices. Venezuela, under chavismo, offers a good political economy illustration of how a country can economically underperform during commodity booms, largely thanks to spending bonanzas related to electoral cycles.

1. What can political science tell us
about oil-rich governments?
Prof. Michael L. Ross
University of California, Los Angeles
November 5, 2015

2. What can political science tell us
about oil and democracy?
Prof. Michael L. Ross
University of California, Los Angeles
November 5, 2015

4. Citations of Mahdavy 1970

5. Mahdavy 1970
• Revived concept of “rentier states”
• Oil  government spending dominates
economy
• Oil  government does not collect taxes
• Oil  leaders neglect development
• “economic and technological backwardness”
• “socio-political stagnation”

6. “socio-political stagnation”
• Mahdavy’s most robust insight
• Research on effects of oil rents on:
– Government accountability (democracy)
– Press freedom
– Corruption
– Both national and subnational politics
• Brazil, Iran, Indonesia, Peru, China, United States
– Incidence of violent conflict

7. Some key insights
• The effects of oil on democracy have grown
since the 1970s

8. Democracy in oil producers vs. all others
All other
states
Major oil
producers

9. Some key insights
• The effects on accountability have grown since
the 1970s
• Effects hold true across regions

10. Countries with least political freedom
Freedom House 2015
Africa
• Equatorial Guinea
• Chad
• Sudan
• South Sudan
• Eritrea
• Central African Republic
• Somalia
Middle East
• Bahrain
• Saudi Arabia
• Syria
East Asia
• China
• Laos
• North Korea
Other regions
• Uzbekistan
• Turkmenistan
• Cuba
• Belarus

11. Countries with least political freedom
Freedom House 2015
Africa
• Equatorial Guinea
• Chad
• Sudan
• South Sudan
• Eritrea
• Central African Republic
• Somalia
Middle East
• Bahrain
• Saudi Arabia
• Syria
East Asia
• China
• Laos
• North Korea
Other regions
• Uzbekistan
• Turkmenistan
• Cuba
• Belarus

12. Some key insights
• The effects on accountability have grown since
the 1970s
• Effects hold true across regions
• Oil  durability of autocratic leaders

13. Longest-serving autocrats
Teodoro Obiang (1979- )
(Equatorial Guinea)
Eduardo dos Santos (1979- )
(Angola)

14. Some key insights
• The effects on accountability have grown since
the 1970s
• Effects hold true across regions
• Oil  durability of autocratic leaders
• Transitions in oil states when revenues drop

15. Oil income in Mexico (1960-2014)
Transition year

16. Oil income in Nigeria (1960-2014)
Transition year

17. Oil income in Indonesia (1960-2014)
Transition year

18. Oil income in Russia (1960-2014)
USSR collapse

19. Some key insights
• The effects on accountability have grown since
the 1970s
• Effects hold true across regions
• Oil  durability of autocratic leaders
• Transitions in oil states when revenues drop
• Most successful transitions to democracy in
countries with little or no oil

20. Democratic Transitions in
Muslim States (1960-2012)
Country Year Oil Income/capita
Turkey 1961, 1983 $8
Sudan 1965, 1986 0
Pakistan 1972, 1988 9
Kyrgystan 1990 1
Comoros 1990 0
Bangladesh 1991 6
Mali 1992 0
Niger 1993, 1999 0
Indonesia 1999 70
Senegal 2000 0
Tunisia 2012 134

21. Will we see political transitions
in the high-rent oil exporters?

22. Oil & transitions to democracy

23. Summary
• Legacy of Mahdavy 1970: oil reduces political
accountability
• Effect has grown over time and is true across
countries
• Transitions occur when oil rents drop
• No precedent for high-rent oil producers