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Resource Rents, Democracy and Corruption: Evidence from Sub-Saharan Africa

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  • Rabah Arezki
  • Thorvaldur Gylfason

Abstract

We examine the effect of the interaction between resource rents and democracy on corruption for a panel of 29 Sub-Saharan countries during the period from 1985 to 2007. We find that higher resource rents lead to more corruption and that the effect is significantly stronger in less democratic countries. Surprisingly, we also find that higher resource rents lead to fewer internal conflicts and that less democratic countries face not a higher but a lower likelihood of conflicts following an increase in resource rents. We argue that these findings can be explained by the ability of the political elites in less democratic countries to more effectively quell the masses through redistribution of rents to the public. We support our argument by documenting that higher resource rents lead to more (less) government spending in less (more) democratic countries. Our findings suggest that the mechanisms through which resource rents affect corruption cannot be separated from political systems.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-09/cesifo1_wp3575.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3575.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3575

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Related research

Keywords: resource rents; corruption; political systems; internal conflicts;

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References

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  1. Alberto Alesina & Arnaud Devleeschauwer & William Easterly & Sergio Kurlat & Romain Wacziarg, 2003. "Fractionalization," NBER Working Papers 9411, National Bureau of Economic Research, Inc.
  2. Sambit Bhattacharyya & Roland Hodler, 2008. "Natural Resources, Democracy and Corruption," OxCarre Working Papers 020, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  3. R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
  4. International Monetary Fund, 2009. "Oil Rents, Corruption, and State Stability," IMF Working Papers 09/267, International Monetary Fund.
  5. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August.
  6. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," World Bank Economic Review, World Bank Group, vol. 13(2), pages 333-56, May.
  7. Paul Collier & Anke Hoeffler, 2004. "Greed and Grievance in Civil War," Development and Comp Systems 0409007, EconWPA.
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Cited by:
  1. Kjetil Bjorvatn & Mohammad Reza Farzanegan, 2014. "Resource Rents, Power, and Political Stability," CESifo Working Paper Series 4727, CESifo Group Munich.
  2. Asongu Simplice, 2012. "African Development: Beyond Income Convergence," Working Papers 12/002, African Governance and Development Institute..

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