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- 1. 1 RSCH 300 Introduction to Business Research Week 5 Dr. Patty Zakaria Data Collection – Interviews & Observation Lecture Content 1. Data Collection Methods Interviews, telephone, direct email, mail, internet, diaries 2. Observation Methods Direct, video, indirect 3 Introduction and Interviews Sources of Data
- 2. • Primary data: information obtained firsthand by the researcher on the variables of interest for the specific purpose of the study. • Examples: individuals, focus groups, panels • Secondary data: information gathered from sources already existing. • Examples: company records or archives, government publications, industry analyses offered by the media, web sites, the Internet, and so on. Interviews • Unstructured interviews: • the interviewer does not enter the interview setting with a planned sequence of questions to be asked of the respondent. • Structured interviews: • Conducted when it is known at the outset what information is needed. • The interviewer has a list of predetermined questions to be asked of the respondents either personally, through the telephone, or via the computer. © 2012 John Wiley & Sons Ltd. www.wiley.com/college/sekaran
- 3. WHY DO A SURVEY? 1. Uniqueness: gather information not available from other sources 2. Probability Sampling: unbiased representation of population of interest 3. Standardization of measurement: same information collected from every respondent 4. Analysis needs: use survey data to compliment existing data from secondary sources MODES OF SURVEY ADMINISTRATION -to-Face)
- 4. HOW DO YOU DECIDE ON THE MODE OF DATA COLLECTION? Population + Characteristics Of The Sample + Types of Questions + Question Topic + Response Rate + $$ Cost $$ + Time PERSONAL INTERVIEWING ADVANTAGES: rates
- 5. ty -method data collection DISADVANTAGES: TELEPHONE INTERVIEWING ADVANTAGES: sonal interviews for list samples DISADVANTAGES:
- 6. numbers topics MAIL SURVEYS ADVANTAGES: lly lowest cost staff) DISADVANTAGES: tion
- 7. WEB SURVEYS ADVANTAGES: costs) DISADVANTAGES: home e-mail resentative samples difficult - cannot generate random samples of general population software for accessing Web surveys f graphics that can be used Self-administered
- 8. • Advantages • Lowest cost option • Expanded geographical coverage • Requires minimal staff • Perceived as more anonymous • Disadvantages • Low response rate in some modes • No interviewer intervention possible for clarification • Cannot be too long or complex • Incomplete surveys © 2012 John Wiley & Sons Ltd. www.wiley.com/college/sekaran Projective Methods • Word association techniques: • Asking the respondent to quickly associate a word with the first thing that comes to mind. • Often used to get at true attitudes and feelings. • Thematic apperception tests (TAT): • Call for respondent to weave a story around a picture that is shown.
- 9. • To trace patterns and personality characteristics of respondents. • Inkblot tests: • Form of motivational research, uses colored inkblots that are interpreted by respondents. © 2012 John Wiley & Sons Ltd. www.wiley.com/college/sekaran Variable Mail Phone Face to Face Cost Cheapest Moderate Costly Speed Moderate Fast Slow Response rate Low to moderate Moderate High Sampling need Address Telephone number Address Burden on respondent High Moderate Low Control participation Of others Unknown High Variable Length of Questionnaire Short Moderate Long Sensitive questions Best Moderate Poor Lengthy answer choices Poor Moderate Best
- 10. Open-ended responses Poor Moderate Best Complexity of Questionnaire Poor Good Best Possibility of interviewer bias None Moderate High COMPARISON OF DATA COLLECTION METHODS PAPER VS. COMPUTER ADMINISTRATION PAPI: Paper and Pencil Interviewing CAI: Computer-Assisted Interviewing CATI: Computer-Assisted Telephone Interviewing CAPI: Computer-Assisted Personal Interviewing CASI: Computer-Assisted Self-Interview Audio-CASI: Audio Computer-Assisted Self-Interview ADVANTAGES OF COMPUTER ADMINISTRATION
- 11. Branching Insertion of Data Instant Editing Available Faster After Collection 19 Data Collection Methods: Observation © 2012 John Wiley & Sons Ltd. www.wiley.com/college/sekaran © 2012 John Wiley & Sons Ltd. www.wiley.com/college/sekaran Observation… Involves all 5 senses: sight, hearing, smell, touch, and taste Examples
- 12. • Shadowing a Wall Street broker engaged in his daily routine. • Observing in-store shopping behavior of consumers via a camera. • Sitting in the corner of an office to observe how a merchant bank trader operates. • Working in a plant to study factory life. • Studying the approach skills of sales people disguised as a shopper. © 2012 John Wiley & Sons Ltd. www.wiley.com/college/sekaran Purpose and benefits of observation as a data collection method • It is unobtrusive • You can see things in their natural context • You can see things that may escape conscious awareness, things that are not seen by others • You can discover things no else has ever really paid attention to, things that are taken for granted • You can learn about things people may be unwilling to talk about
- 13. • It is inconspicuous – least potential for generating observer effects • It is the least intrusive of all methods • You can be totally creative – flexibility to yield insight into new realities or new ways of looking at old realities Observations Advantages • Most direct measure of behavior • Provides direct information • Easy to complete, saves time • Can be used in natural or experimental settings Disadvantages • May require training • Observer’s presence may create artificial
- 14. situation • Potential for bias • Potential to overlook meaningful aspects • Potential for misinterpretation • Difficult to analyze Observation – Ethical issues • Unobtrusiveness is its greatest strength; also potential for abuse in invasion of privacy • You can venture into places and gather data almost anywhere so be ethical • Remember our Human Subjects Protection guidelines • Consent form for participating in an observational study What to observe? • Descriptive observation stage: • Space • Objects
- 15. • Actors • Feelings • Events Spradly, 1980 © 2012 John Wiley & Sons Ltd. www.wiley.com/college/sekaran Types of observation Structured Unstructured Observing what does not happen may be as important as observing what does happen. Sometimes we have something specific we want to observe – leadership skills; level of participation; etc. We use a structured, preset guide of what to
- 16. observe or a checklist. Sometimes we want to see what is naturally occurring or exists without predetermined ideas. We use have an open-ended approach to observation and record all that we observe Who/what can you observe • People (individuals, groups, communities) • Characteristics • Interactions • Behaviors • Reactions • Physical settings • Environmental features
- 17. • Products/physical artifacts Use sampling strategies as you do for other methods of data collection Camera Video Inventories Files Words metrics Fingerprints Website visits Filtering Observations Data Collected Written form • Questionnaire • Observations • Computer Data is Edited
- 18. Data is Coded Into Computer Data is Transposed into Analysis Format Organize data collection with analysis in mind Frequencies Cross Tabulation Anova Correlations Regressions Thank you AYK 15Apply Your KnowledgeProject 15 - Assessing the Value of InformationInput boxes in tanOutput boxes in yellowGiven data in blueAnswers in red Value of InformationLOT #PROJECT #ASK PRICESELL PRICELIST DATESALE DATESQ. FT.# BATH.#BDRMS6423$70,000$70,00001-Jan-1111-Jan- 111500337223$86,900$84,50001-Jan-1111-Jan- 1116002.5311961$93,500$92,50001-Jan-1115-Jan- 1117001311861$75,500$74,50001-Jan-1102-Feb- 1114002.5313761$95,000$94,30001-Feb-1114-Feb- 111800137823$87,000$84,57001-Jan-1117-Feb- 1117502.546923$92,500$91,50001-Jan-1117-Feb- 1117003410761$67,500$65,00001-Jan-1118-Feb- 1112001216397$94,000$92,00005-Feb-1119-Feb- 1117002417697$90,000$89,30005-Feb-1121-Feb- 111750246623$81,500$80,00001-Jan-1128-Feb- 1115502.2547423$92,500$90,00001-Jan-1101-Mar-
- 35. 1120002.25412997$75,800$75,80023-Aug-1110-Dec- 111475339323$86,000$84,90001-Jun-1111-Apr- 1116001312797$81,200$75,00023-Aug-1113-Dec- 1114001414297$108,000$102,00023-Aug-1114-Dec- 1119002.5413497$93,500$92,00023-Aug-1116-Dec- 1117501412897$79,000$77,60023-Aug-1119-Dec- 1114502313597$70,000$68,25023-Aug-1121-Dec- 111350335278$69,900$67,89029-Jul-1121-Dec- 1113002414397$97,890$96,57023-Aug-1121-Dec- 1118502314497$96,780$94,57023-Aug-1131-Dec- 1117501.753105847$69,900$67,89025-Apr-1114-Jan- 0213002214597$94,000$91,00023-Aug-1115-Jan-02170034 1 RSCH 300 Introduction to Business Research Week 4 Dr. Patty ZakariaDeveloping Hypotheses & Research Design Lecture Content 1. Research Concept 2. Research Design 3. Role of Variables 4. Classification of Errors 5. Developing Hypotheses
- 36. 6. Questions 2 Research Concepts Example: Economic activityTheoretical paper Marconomics Probable Proven 3 Table 1.1 Comparing Classical Economics and Scientific Methodology Classical Economics Procedure Scientific Methodology Observe a phenomenon, Ask a question Make simplifying
- 37. assumptions and develop a model (a set of one or more hypotheses) Do background research Make predictions, and Construct a hypothesis Test the model. Test the hypothesis by doing an experiment (Empiricity) Analyze the data and draw a conclusion leading to principles Economics is not scientific!! 4 Research Design 5 Research Design: Definition • A research design is a framework or blueprint for conducting the business research project. It details the procedures necessary for obtaining the information needed to structure or solve business research problems.
- 38. 6 Components of a Research Design • Define the information needed • Design the exploratory, descriptive, and/or causal phases of the research • Specify the measurement and scaling procedures • Construct and pretest a questionnaire (interviewing form) or an appropriate form for data collection • Specify the sampling process and sample size • Develop a plan of data analysis 7 A Classification of Business Research Designs Single Cross- Sectional Design Multiple Cross- Sectional Design Research Design
- 39. Conclusive Research Design Exploratory Research Design Descriptive Research Causal Research Cross-Sectional Design Longitudinal Design 8 Exploratory & Conclusive Research Differences Objective: Character- istics:
- 40. Findings /Results: Outcome: To provide insights and understanding. Information needed is defined only loosely. Research process is flexible and unstructured. Sample is small and non- representative. Analysis of primary data is qualitative. Tentative. Generally followed by further exploratory or conclusive research. To test specific hypotheses and examine relationships. Information needed is clearly
- 41. defined. Research process is formal and structured. Sample is large and representative. Data analysis is quantitative. Conclusive. Findings used as input into decision making. Exploratory Conclusive 9 Objective: Characteristics: Methods: A Comparison of Basic Research Designs Discovery of ideas and insights Flexible, versatile Often the front
- 42. end of total research design Expert surveys Pilot surveys Secondary data Qualitative research Describe market characteristics or functions Marked by the prior formulation of specific hypotheses Preplanned and structured design Secondary data Surveys Panels
- 43. Observation and other data Determine cause and effect relationships Manipulation of one or more independent variables Control of other mediating variables Experiments Exploratory Descriptive Causal 10 Uses of Exploratory Research • Formulate a problem or define a problem more precisely
- 44. • Identify alternative courses of action • Develop hypotheses • Isolate key variables and relationships for further examination • Gain insights for developing an approach to the problem • Establish priorities for further research 11 Methods of Exploratory Research • Survey of experts • Pilot surveys • Secondary data analyzed in a qualitative way • Qualitative research 12 Use of Descriptive Research • To describe the characteristics of relevant groups, such as consumers, salespeople, organizations, or market areas.
- 45. • To estimate the percentage of units in a specified population exhibiting a certain behavior. • To determine the perceptions of product characteristics. • To determine the degree to which marketing variables are associated. • To make specific predictions 13 Methods of Descriptive Research • Secondary data analyzed in a quantitative as opposed to a qualitative manner • Surveys • Panels • Observational and other data 14 Cross-sectional Designs • Involve the collection of information from any given sample of population elements only once.
- 46. • In single cross-sectional designs, there is only one sample of respondents and information is obtained from this sample only once. • In multiple cross-sectional designs, there are two or more samples of respondents, and information from each sample is obtained only once. Often, information from different samples is obtained at different times. • Cohort analysis consists of a series of surveys conducted at appropriate time intervals, where the cohort serves as the basic unit of analysis. A cohort is a group of respondents who experience the same event within the same time interval. 15 Longitudinal Designs • A fixed sample (or samples) of population elements is measured repeatedly on the same variables • A longitudinal design differs from a cross-sectional design in that the sample or samples remain the same over time 16 Consumption of Various Soft Drinks by Various Age Cohorts
- 47. 8-19 20-29 30-39 40-49 50+ Age 1980 1989 19991970 52.9 45.2 33.9 23.2 18.1 62.6 60.7 46.6 40.8 28.8 C1 73.2 76.0 67.7 58.6 50.0 C2 81.0 75.8 71.4 67.8 51.9 C3 C8
- 48. C7 C6 C5 C4 C1: cohort born prior to 1920 C2: cohort born 1921-30 C3: cohort born 1931-40 C4: cohort born 1941-50 C5: cohort born 1951-40 C6: cohort born 1960-69 C7: cohort born 1970-79 C8: cohort born 1980-89 Percentage consuming on a typical day Cross Tabulation X-Tabs 17 Relative Advantages and Disadvantages of Longitudinal and Cross-Sectional Designs Evaluation Criteria Cross-Sectional Design Longitudinal Design Detecting Change Large amount of data collection Accuracy Representative Sampling
- 49. Response bias - - - + + + + + - - Note: A “+” indicates a relative advantage over the other design, whereas a “-” indicates a relative disadvantage. 18 Potential Sources of Error in Research Designs Surrogate Information Error Measurement Error Population Definition Error Sampling Frame Error Data Analysis Error Respondent Selection Error
- 50. Questioning Error Recording Error Cheating Error Inability Error Unwillingness Error Total Error Non-sampling Error Random Sampling Error Non-response Error Response Error Interviewer Error Respondent Error
- 51. Researcher Error 19 Errors in Business Research The TOTAL ERROR is the variation between the true mean value in the population of the variable of interest and the observed mean value obtained in the business research project • I. Random sampling error is the variation between the true mean value in the population and the true mean value in the original sample. • II. Nonsampling error (can be attributed to sources other than sampling) • 1) Nonresponse error: when some respondents included in the sample do not respond (refusals or not- at-homes) 20 Errors in Business Research • 2) Response error: • Researcher errors • a) Surrogate information error: the variation between the info
- 52. needed and sought by the researcher (e.g., instead of info on consumer choices, the researcher obtains info on consumer preferences because the choice process cannot be easily observed) • b) Measurement error: the variation between the info sought and info generated (e.g., measuring perceptions rather than preferences) 21 Errors in Business Research • c) Population definition error: the variation between the actual population relevant to the problem at hand and the pop. as defined by the researcher (e.g., how to define a population of affluent households?) • a) income of $50K or more? • b) the top 20% of households as measured by income? • c) with net worth over $250,000? Calgon Dishwasher survey Mississauga 22 Errors in Business Research • d) Sampling frame error: the variation between the population
- 53. defined by the researcher and the population as implied by the sampling frame (e.g., the telephone directory used to generate a list of telephone numbers does not accurately represent the pop. of potential consumers due to unlisted, disconnected, and new numbers in service) • e) Data analysis error: e.g., when an inappropriate statistical procedure is used 23 Errors in Business Research • Interviewer errors • a) Respondent selection error: respondents are selected other than those specified by the sampling design (e.g., a non-reader of a journal is selected rather than a reader to meet a difficult quota requirement) • b) Questioning error: e.g., interviewer does not use the exact wording given in a questionn. • c) Recording error: errors in hearing, interpreting, and recording the answers • d) Cheating error: the interviewer fabricates the answers (e.g., does not ask about income, but then fills in the answer based on personal assessment) 24
- 54. Errors in Business Research • Respondent errors • a) Inability error: because of unfamiliarity, fatigue, boredom, faulty recall, question format, question content, etc. (e.g., a respondent cannot recall the brand of yogurt purchased four weeks ago) • b) Unwillingness error: • No answer • Intentionally wrong answer (e.g., declares himself as a reader of a prestigious magazine rather than a tabloid) 25 • Variable: Describes a measured concept, attitude, preference, • Types of Variables: • Categorical: Identifies with a group, area, etc. Where do you live? • Dependent: Predicted, explained or influenced by others – What is final GPA? • Independent: Expected to influence dependent variable in some way – Hours studies, amount of sleep, level of interest in subject, quality instruction, income
- 55. • Intervening: Social activities in area The Role of Variables 26 Let’s assume we want to know how we might improve the quality of our graduating students A Research Problem 27 DEVELOPING HYPOTHESES & RESEARCH QUESTIONS Research structure should be : Quantifiable Verifiable Replicable Defensible Model Research Question Develop a Theory Identify Variables Identify Hypothesis Test Hypothesis Evaluate Results Critical Review Reflection Why? Your Answer
- 56. How Expectations Collect Analyze Data What it Means What it Doesn’t Mean 28 Definitions of hypothesis • Hypotheses are single tentative guesses, good hunches – assumed for use in devising theory or planning experiments intended to be given a direct experimental test when possible”. (Eric Rogers, 1966) • A hypothesis is a conjectural statement of the relation between two or more variables”. (Kerlinger, 1956) • Hypothesis is a formal statement that presents the expected relationship between an independent and dependent variable.”(Creswell, 1994) • A research question is essentially a hypothesis asked in the form of a question.”
- 57. 29 An Example… We are interested in finding out how we can improve the reputation of the University. More importantly we want to develop highly skilled and professional graduates who will do well in the business community. We suspect the solution lies in the improvement of student GPA. We also suspect that a number of variables influence the GPA standing of students, in particular the quality of instruction, the use of technology, study time and the motivation of students as a few of the variables that come to mind. Out of this we have a question: – How can we improve the GPA level of out graduating students? This leads to a hypothesis: Student GPA is related to the quality of instruction received from the University. 30
- 58. Nature of Hypothesis The hypothesis is a clear statement of what is intended to be investigated. It should be specified before research is conducted and openly stated in reporting the results. This allows you to: Identify the research objectives, Identify the key abstract concepts involved in the research Identify its relationship to both the problem statement and the literature review A problem cannot be scientifically solved unless it is reduced to hypothesis form It is a powerful tool of advancement of knowledge, consistent with existing knowledge and conducive to further enquiry 31 What Information do we Need? In order to establish the hypothesis we need specific data. Here are a number of objectives
- 59. 1. The GPA of students 2. Time spent studying by students 3. Quality of instruction 4. Instructor credentials 5. Use of support programs in education 6. Use of technology in instruction 7. Quality of material used 8. Entering GPA of students 9. Response from employers 10. Demographics of participants These objectives then serve as the basis for creating questions that can be used in surveys etc.. 32 Thank you 33 Petropolitics 1
- 60. Petropolitics in the Organization of the Petroleum Exporting Countries [OPEC]
- 61. Petropolitics 2 Introduction Many scholars have argued that when economic development occurs in a country, governments tend to move towards becoming more democratic (Helliwell, 1994). Economic development, for example, brings about rising income rates, increasing values of natural resources, higher standard of living, and increasing Gross Domestic Product [GDP] per capita. On the other hand, if such economic development occurs as a result of petroleum, than democratic tendencies do not transpire. It is important to note that petropolitics is the extent to which the world’s largest industry influences and dictates policy and politics, especially in oil exporting countries (Karl, 1997). Much of the literature on petropolitics has investigated the effects of rentier
- 62. states in the Middle East and North Africa (Berry 2005, Clark 1997, Ramsay 2006, Ross 2000 & 2001, Smith 2004 and Wantchekon 2002). Several of the sources supported the idea that the production of petroleum leads to anti-democratic properties in countries. Equally important, the literature has highlighted that resource-abundant countries tend to develop more slowly then resource-poor countries (Friedman 2006, Helliwell 1994, and others). The purpose of this study is to determine the impact that increasing oil prices have on democratic properties in the Organization of the Petroleum Exporting Countries [OPEC]. The study will be guided by the following questions. 1) Does oil play a fundamental role in determining the course of society?; 2) Are higher oil prices in OPEC countries associated with less tolerance for minority groups, including both ethnic and/or religious groups in OPEC countries?; 3) Do non-OPEC countries have better levels of democracy?; 4) Are oil prices inversely related to free speech, free press, as well as
- 63. free and fair elections?; and finally, 5) How has the rule of law been eroded in OPEC countries with the rise of oil Petropolitics 3 prices? Such research questions are important since oil and democracy have become a hot topic in the twenty-first century, particularly with the United State’s attempt to restructure Iraq into a democratic state. In sum this research study will attempt to provide an empirical examination of petropolitics, where the price of oil barrels is inversely related to the level of democracy in OPEC countries. Literature Review Much of the literature on petropolitics has investigated the implication of oil on democracy in oil producing and exporting countries (Ramsay 2006, Ross 2001b,
- 64. Freidman 2006 and Wantchekon 2002). Friedman (2006) completed a study on oil prices and levels of freedom in oil exporting countries, which he coined the First Law of Petropolitics. Freidman argued that “…the price of oil and the pace of freedom always move in opposite directions in oil-rich petrolist states (p. 31). Similarly, Ross (2001) concluded that oil impedes democracy in oil producing states of the Middle East and other regions. Interestingly, Ross’s study outlined that oil production as well as exportation greatly impede democracy in the poorer countries rather than in the richer countries (p. 356). Equally important, Ross’s study also included non-Mideast regions such as Indonesia, Mexico, Chile, Angola, Peru, Cambodia and the Democratic Republic of Congo, where he discovered that oil and non-fuel minerals had impeded democracy. In a different study Ross (2003a) investigated the influence mineral wealth has on poverty levels in countries. Ross illustrates that non-fuel minerals and fuel minerals are associated
- 65. with poverty. With respect to the latter, Ross suggests that poverty is associated with the Petropolitics 4 reduction of low-wage employment opportunities and the lack of democracy in a country. In regards to poverty, individuals are incapable of advancing their political rights, which halts the process of democracy in a country. To a lesser extent, this study exemplify that oil impedes democracy through poverty. Several studies have reflected the ‘resource-curse’ where resources abundance, particularly in oil, has been followed by authoritarian regimes (Wantchekon, Ross 2000c, Sachs and Warner 2001). The resource curse is characterized by abundance of natural resources in poor and developing countries, where such wealth is detrimental for the country’s development (Ross, p. 328). The resource curse, in much of the literature, has been compared to the ‘Dutch disease’. Ramsay (2006) conducted a study to determine the
- 66. detrimental effect of the increase in values of natural resources, particularly in oil, has on the level of political freedom in oil producing countries. In his study, Ramsay concluded that a negative relationship existed between oil resources and political institutions in oil producing countries. Equivalently, Clark notes that the discovery of oil was a vital factor in consolidating a non-democratic regime in the Congo (1997, p. 65). Wantchekon, for example, illustrates that in Nigeria the government become more centralized as oil revenues increased the countries Gross Domestic Product [GDP] from 1% in 1960, 30% in 1964 to 90% in 1979 (p. 13). Following a regression analysis Wantchekon confirmed a statistically significant association between resource dependency in several African countries and authoritarianism. In addition, a considerable amount of the literature focused on the effects of resource rent countries that are being referred to as rentier states (Beblawi 1987, Clark 1997, Smith 2004, Ross 2001b, Ramsay 2006, Wantchekon 2002
- 67. and Friedman 2006). Petropolitics 5 The term rentier state was first utilized by economists to illustrate European loans to non- European countries (Ross, p. 329). A rentier state is defined as one with an economic structure that is dominated by the access to natural resources, where government revenues mainly come from the sale of natural resources. Basically, rents from natural resources are paid to state leaders and governments by foreign actors. Beblawi suggests that rentier states are ones that “…only a few are engaged in the generation of this rent (wealth), the majority being only involved in the distribution or utilization of it” (1987, p. 51). Essentially, Ramsay argues that rentier states have considerable autonomy in the political arena of their respective countries. Middle East specialist Muhdavy illustrated that resource rents allow oil producing countries in the Mideast to be less accountable in
- 68. governance because they do not depend on tax revenues (1970). Both Beblawi and Mahdavy redefined the rentier state idea from the initial definition of European loans, where they included the idea of states receiving rent from foreign actors. Interestingly, Wantchekon postulates that resource poor countries have better democratic practices than resource abundant countries (p. 6). Natural resources abundance can lead to competition over the control of the state, especially when the people are unable to monitor the activities of the state. This will pressure the government into using the resource rents to maintain their hold on power (Wantchekon, 2002). On the other hand, if the country is resource poor, there will be less competition for state control. If there is little competition for state control there will be more elite cooperation and the government will function more along democratic lines, rather than resorting to authoritarian measures against its people. However, if the state does, in fact, have an
- 69. abundance of rents, the state’s main goal is to stay in power, while the people want as Petropolitics 6 much of the rent as possible to be distributed to them (Wantchekon, 2002). In this sense, a one party or no party government that faces no opposition can use the wealth to buy political support from a special group of voters. Therefore, the more wealth the government accumulates from the export of resources, the more it can strengthen its political power by buying off political support (Wantchekon, 2002). Wantchekon’s claim is supported by such studies as the one conducted by Badiei and Bina on the ‘rentier character’ of Iran. The government of Iran provides state subsidies to certain groups and institutions that provide protection and ideological support to the present regime (Badiei and Cyrus, 2002). This was also highlighted in Ross’s argument of how resource rents allow the
- 70. state to buy support (2001). With respect to the latter, resource rich countries will be less reliant on tax revenues and more on resource rent revenues, in turn freeing political leaders from fulfilling their democratic responsibilities. In Ross’s study, he implemented the rentier effect to establish a causal link between oil wealth and anti-democratic tendencies in oil exporting countries. Ross postulates three components of the rentier effect: the taxation, the spending, and the group formation effects (p. 333-336). Ross, for example, puts forward the claim that the resource rich governments will reduce the tax rates (taxation effect) in order to prevent the public from politically mobilizing against the government. Similarly, Ramsay illustrates the taxation effect as a causal link between resource wealth and democracy. In relation to the spending effect, resource rents permit states to increase their fiscal spending, in turn reducing pressures for democratic practice. Finally, resource rents from oil provide states with finances to prevent the
- 71. formation of independent social groups demanding more democratic practice. Following Petropolitics 7 a regression analysis, Ross confirms that the rentier effect contributes to the understanding of how oil impedes democracy. The concept of the rentier state was also highlighted by Ramsay, where he asserts that the rentier theory developed from the taxation and representation literature. Such literature argues that the need for revenues through taxation was a critical factor in the development of representative government in Europe (2006, p 3). With respect to the rentier state, taxation is not a critical factor in generating revenues for the state. Rather the government redistributes the wealth to individuals that support the government. On the other hand, resource rents also contribute to the repression effect, where government use resource rents to suppress the populace and defended the statues quo. In short Ramsay asserts that resource wealth has a
- 72. detrimental effect on political freedoms in oil exporting countries. Ross further investigates the modernization effect theory and repression effect theory as another causal mechanism for oil hindering democracy. The modernization effect holds that growth from the export of oil and other minerals does not bring about social and cultural changes in a country. Finally, with the repression effect Ross suggests that oil exporting governments use force to keep the public from politically mobilizing, which in turn impedes democracy (Ross 2001b). However, Ross affirms that the modernization effect is an elusive factor linking oil wealth and authoritarian regimes. On the other hand, Ross postulates that oil wealth and authoritarian regimes are linked to the repression effect. Primarily, oil wealth enables states to spend more on their military apparatus in order to repress popular pressure, in turn forestalling democracy as the repression effect advances. Clark, for example, notes that oil wealth in the Republic
- 73. of Congo was used to support its authoritative regime. The Republic of Congo used oil Petropolitics 8 revenues to fund the military as well as the special presidential guard (Clark1997b and 1998a11). Friedman builds on Ross’s rentier effect argument on oil wealth and authoritarian regimes. Essentially Friedman takes Ross’s argument further by arguing that the rising and falling prices of oil can be correlated to the rising and falling level of freedom in petrolist countries. This assertion leads to Friedman’s first law of petropolitics. Moore recognized that rentier states do not have completely identical characteristics but, in general, they all share some underlying principles. Since the government obtains much of its financial resources through rents, it makes the state more independent of its citizens (Moore, 2004). Citizens are potential taxpayers, however, in
- 74. the case of rentier states, taxes are not heavily relied on. More important is the impact that a rentier state has on its citizens. The absence of taxes will reduce the chance that people will engage in politics (Moore, 2004). People will not be as motivated because the government is not spending the citizens’ tax money (Moore, 2004). Also, there is little or no incentive to create an efficient public bureaucracy since the task of accumulating revenue from the mineral resources can be performed by a small group of qualified individuals (Moore, 2004). Rentier states lack the sort of complex tax system that one finds in a developed democracy. Thus the literature suggests that resources wealth impedes democracy in oil exporting countries, with great emphasis on the rentier effect and the repression effect. Several of the studies either focused on a single country or a combination of country,
- 75. however in the literature reviewed OPEC as a case was not implemented. Thus, OPEC will be the focus of the study at hand, in turn adding another branch to the study of oil Petropolitics 9 and democracy. Theoretical discussion and hypothesis The theories that this study will rely on are the rentier effect and the repression effect cited in several of the literature on petropolitics. Both of these theories play a significant factor on how oil-impedes democracy in oil exporting countries. The rentier effect is appropriate for this study because it explains the absences of democracy in resource abundant countries, particularly in oil. Rentier state
- 76. theorists affirm that the theory does not hold outside the Third world (Goldberg, Wibbles, and Mvukigehe, 2005). This theory is ideal for the study of interest because the unit of analysis consist mostly of third world countries. In the true sense of democracy, most, if not all of the OPEC countries, are not democratic. Since their economies are based on exporting resources, oil in particular, they do not have to rely as much on the public for support. A legitimate democratic government needs to be representative of the population. In the case of rentier states, the governments try to make themselves legitimate by distributing the wealth among its citizens. For this reason, the rentier effect is the most appropriate theory for this study. The repression effect goes hand-in-hand with the rentier effect because most rentier states tend to be repressive. A large portion of the oil revenues is used to increase military spending in order to ensure internal security (Ross, 2001). This is a precaution taken by the state in order to repress or shut
- 77. down any criticism of the government. For this reason, the repression effect is the most appropriate theory for the Petropolitics 10 study. The main concepts that the study will focus on are oil, democracy, and authoritarianism. The primary explanatory independent variable in this study will be the price of oil and oil exporting levels in OPEC countries, while the dependent variable will be the level of democratic properties in OPEC countries. The variables in this study are similar to variables used by Wantchekon, Ross, Smith, Freidman and Panchok-Berry. Methods Design The type of research that will be implemented in this study is available-data
- 78. analysis, entailing the use of time-series cross-national data from OPEC countries. The use of available-data analysis is the most efficient type of research method available for this study, insofar as being an economically advantageous as well as time saving approach. This empirical study will evoke the use of regression analysis which permits the estimation of the effect on the dependent variable by changing one independent variable, while holding the other regressors constant. The temporal scope of the study will be between 1973 and 2004. The onset date for the study was chosen because it marked the date of the 1973 oil crisis, where OPEC increased the price of oil by 70% to Western countries (Anderson, 1997). Data for the study will be pooled from Polity IV dataset and BP Statistical Review of World Energy. The polity IV data set provides regime data from 161 countries from 1800 to 2004. While the BP data set provides the annual price of oil since 1963. The first dataset will be used for the dependent variables
- 79. Petropolitics 11 and the second datasets will be used for the independent variable. Generally, the data used from the two datasets contain an exceptional level of completeness. Subjects A subset 11 countries will be selected from the population of 46 oil producing countries. The 11 cases were selected because the focus of the study is on OPEC. The unit of analysis in this study will be the state, essentially OPEC countries. OPEC members include Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. This study will exclude former OPEC members Gabon and Ecuador from the unit of analysis. Thus, the sample size will be 11 countries.
- 80. Measurement The operational definition of the dependent variable is the democratic properties in OPEC, whereas the independent variable is the country’s price of an oil barrel in US currency. In Polity IV democracy is coded as DEMOC, which refers to the institutional democracy. According to the data set the democracy variable is composed of three interdependent elements (Marshall and Jaggers, 2005, p. 13). First, having institutions and procedures where individuals can seek to make claims and concerns about policies and leaders. Second, legal restrains on the power of the leaders. Third, a guarantee of civil liberties and political participation to all citizens. Democracy, for example, also included rule of law and freedom of the press. The data measures countries on a democratic scale from 0 to 10 [Refer to appendix 1]. In polity IV autocracy is coded as
- 81. Petropolitics 12 AUTOC, which refers to institutionalized autocracy. Autocracy is operationally defined in the data set as governments restricting or suppressing competitive political participation in a country. The data measures countries on an authoritarian scale from 0 to 10 [Refer to appendix 2]. By following Ross (2001) and Wantchekon (2002), both of these measures will be transformed into one variable. This will be accomplished by subtracting autocracy measures from democracy measures, and then rescaling. Marshall and Jaggers implemented inter-coder reliability check in the Polity IV data set to improve the consistency and confidence of the data (2005). For the independent variable the BP Statistical Review of World Energy data set will be used. This data set provides annual oil prices, including OPEC countries exporting oil price for barrels annually. Additionally, controlling for the extraneous variables will ensure that the
- 82. independent variable caused the change in the dependent variable and not a third variable. The extraneous variables that will be controlled for in the study are Islam, Gross Domestic Product [GDP], income levels, and educational levels. Much of the literature also controlled for these variables as well (Ramsay 2006, Ross 2001b, and Wantchekon 2002). It is essential that Islam is controlled for in Middle Eastern and North African countries, since such variable can greatly influence the results. By using the regression analysis the extraneous variables will be held constant in the regression equation. Measurement validity will be ensured with a goodness of fit test between the operational definitions and the concepts it is suppose to measure. In this study SPSS statistical software will used to carry out the regression analysis. Finally, this study will not have any kind of pretesting.
- 83. Petropolitics 13 Conclusion Petropolitics has become a hot and controversial topic in the realm of international relations. Democracy has been the central issue in many oil producing and exporting countries, where democratic tendencies have not transpired with the economic wealth that oil resources have generated for some countries. The following study aims to illustrate how increasing oil prices have had a detrimental impact on democratic properties in the OPEC countries. Much of the literature has supported the idea that oil wealth impedes democracy; however, none of the literature specifically focused on OPEC countries alone. It is important to note that OPEC countries are the largest oil exporting countries in the world. By focusing attention mainly on OPEC countries, the rentier effect will be magnified, thus yielding better results in the study. Interestingly, since the oil
- 84. sources are depleting, the price of oil will gradually increase. Such price increases will follow micro-economic supply theory, where supply levels and price levels are inversely related. Thus, one wonders how OPEC countries will behave in the future as oil prices will increase, in turn, leading to more wealth for the states in question. Future research studies could focus specifically on the Middle East region where 60% of the world’s oil is located (Jackson and Towle, 2006: 76). It is estimated that the oil in the Middle East will last approximately 85 years if it will continue to be extracted at the same rate as today (Jackson and Towle, 2006: 76). This entails that in the near future most, if not all, of the oil reserves will be the ones located in the Middle East. Oil is a very valuable resource for all nations across the globe. It would be interesting to study how the behavior of the regimes in oil-exporting rentier states, especially in the Middle East, will change from now on as oil will become scarcer and more sought after. Will the regimes
- 85. Petropolitics 14 become more authoritative or more democratic? Based on the previous literature, it is fair to say that rentier states will have more wealth and power as oil will become more sought after. Since rentier states do not have a history of implementing democratic policies, it is expected that the same trend will continue in the future.
- 86. Petropolitics 15 Reference Badiei, Sousan and Bina, Cyrus. 2002. “Oil and the Rentier State: Iran’s Capital Formation (1960-1997).” Proceedings of the Middle East Economic Association, Vol. 4 Beblawi, Hazem. 1987. “The Rentier State in the Arab World,”
- 87. in Hazem Beblawi and Giacomo Luciani, eds., The Rentier State. New York: Croom Helm. Clark, John. 1998a. “Foreign Intervention in the Civil War of the Congo Republic.” Issue: A Journal of Opinion 26(1): 31 – 36. __________. 1997b. “Petro-Politics in Congo.” Journal of Democracy, 8(3): 62 – 76. Available at: www.proxy.lib.edu:2128/journals_of_democracy/v008/8.3clark. html Retrieved on: October 30, 2006. Friedman, Thomas. 2006. “The First Law of Petropolitics”. The Ecologist, 36(7): 24 – 29. Available at: www.proxy.lib.edu:2073/pqdweb?index=0&sid=1&srchmode=1 &vinst=PROD& Retrieved on: October 30, 2006. Jackson, Robert J. and Towle Philip. 2006. Temptations of Power: The United States in
- 88. Global Politics after 9/11. Palgrave Macmillan. Mahdavy, Hosseim. (1970). “Patterns and Problems of Economic Development in Rentier States: The Case of Iran”, in Studies in the Economic History of the Middle East, edited by M.A. Cook, Oxford: Oxford University Press. Marshall, M., and Jaggers, K. (2005). Polity IV Project: Political Regime Characteristics and Transition, 1800 – 2004, Polity Dataset. George Mason University: Arlington, VA. Moore, Mick. (2004). “Revenues, State Formation, and the Quality of Governance in Developing Countries.” International Political Science Review, Vol. 25, No. 3, 297-319 Ramsay, Kristopher. 2006. The Price of Oil and Democracy. Princeton University working paper: 1 – 25.
- 89. Ross, Michael. 2003a. “How does Mineral Wealth Affect the Poor?”. ____________. 2001b. “Does Oil Hinder Democracy?” World Politics, 53: 325 – 361. ____________. 2000c. “Does Resource Wealth cause Authoritarian Rule?”. For Presentation at Yale University. http://www.proxy.lib.edu:2128/journals_of_democracy/v008/8.3 clark.html http://www.proxy.lib.edu:2073/pqdweb?index=0&sid=1&srchm ode=1&vinst=PROD& Petropolitics 16 Smith, Benjamin. (2004). “Oil Wealth and Regime Survival in the Developing World, 1960 – 1999”. American Journal of Political Review, Vol. 48, No. 2: 232 – 246. Wantchekon, Leonard (2002). “Why do Resources Abundant Countries Have Authoritarian Governments?” Yale University: 1 - 31.
- 91. Petropolitics 17 Appendix 1: Institutional Democracy Authority Coding Scale Weight Competitiveness of Executive Recruitment (XRCOMP): (3) Election +2 (2) Transnational +1 Openness of Executive Recruitment (XROPEN): Only if XRCOMP is Election (3) or Transitional (2) (3) Dual/election +1 (4) Election +1 Constraint on Chief Executive (XCONST): (7) Executive parity or subordination +4 (6) Intermediate Category +3
- 92. (5) Substantial Limitations +2 (4) Intermediate Category +1 Competitiveness of Political Participation (PARCOMP): (5) Competitive +3 (4) Transitional +2 (3) Factional +1 Source: Polity IV: Dataset user’s manual, p 14. Appendix 2: Institutional Autocracy Authority Coding Scale Weight Competitiveness of Executive Recruitment (XRCOMP): (1) Selection +2 Openness of Executive Recruitment (XROPEN): Only if XRCOMP is Election (3) or Transitional (2) (1) Closed +1 (2) Dual/designation +1
- 93. Constraint on Chief Executive (XCONST): (1) Unlimited Authority +3 (2) Intermediate Category +2 (3) Slight to Moderate Limitations +1 Regulation of Participation (PARREG): (4) Restricted +2 Petropolitics 18 (3) Sectarian +1 Competitiveness of Participation (PARCOMP): (1) Repressed +2 (2) Suppressed +1 Source: Polity IV: Dataset user’s manual, p 15.