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Resource Windfalls, Political Regimes, and Political Stability

Author

Listed:
  • Francesco Caselli

    (LSE, CFM, CEP, CEPR, and NBER)

  • Andrea Tesei

    (Queen Mary, CEP, and CESifo)

Abstract

We study theoretically and empirically whether natural resource windfalls affect political regimes. We show that windfalls have no effect on democracies, while they have heterogeneous political consequences in autocracies. In deeply entrenched autocracies, the effect of windfalls is virtually nil, while in moderately entrenched autocracies, windfalls significantly exacerbate the autocratic nature of the political system. To frame the empirical work, we present a simple model in which political incumbents choose the degree of political contestability and potential challengers decide whether to try to unseat the incumbents. The model uncovers a mechanism for the asymmetric impact of resource windfalls on democracies and autocracies, as well as the the differential impact within autocracies.

Suggested Citation

  • Francesco Caselli & Andrea Tesei, 2016. "Resource Windfalls, Political Regimes, and Political Stability," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 573-590, July.
    • Handle: RePEc:tpr:restat:v:98:y:2016:i:3:p:573-590
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    Keywords

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    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General

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