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Dictatorships as a Political Dutch Disease

Author

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  • Ricky Lam
  • Leonard Wantchekon

Abstract

We present a model to explain why natural resource windfalls tend not only to lead to slower economic growth but to generate and reinforce authoritarian tendencies in Third World political regimes. In the model, the political elite's power over the populace is derived both from its own wealth and its control over the process of rent distribution among members of the populace (distributive influence). We show that resource windfalls enhance the elite's distributive influence. An increase in the elite's distributive influence generates hegemonic political regimes and exacerbates the decline of the economy. We present wide-ranging empirical evidence to support our theoretical insights. In particular, we find the size of the natural resource sector, measured by the ratio of primary exports to GDP, to be a far more significant predictor of the nature of political regimes than the level of GDP, education, or income inequality.

Suggested Citation

  • Ricky Lam & Leonard Wantchekon, 1999. "Dictatorships as a Political Dutch Disease," Working Papers 795, Economic Growth Center, Yale University.
  • Handle: RePEc:egc:wpaper:795
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    Citations

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    Cited by:

    1. Bart Capéau & Philip Verwimp, 2012. "Dictatorship in a single export crop economy," Journal of Theoretical Politics, , vol. 24(2), pages 210-234, April.
    2. Hamid E. Ali & Omnia A. Abdellatif, 2015. "Military Expenditures and Natural Resources: Evidence from Rentier States in the Middle East and North Africa," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(1), pages 5-13, February.

    More about this item

    Keywords

    Dutch Disease; Rent-seeking; Influence Activities; Political Regimes.;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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