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Oil Revenues, Ethnic Fragmentation and Political Transition of Authoritarian Regimes

Author

Listed:
  • Alessandro Cologni

    (Edison Trading, Edison S.p.A., Italy)

  • Matteo Manera

    (Department of Statistics, University of Milan-Bicocca and Fondazione Eni Enrico Mattei, Italy)

Abstract

Natural resources are generally associated to negative effects on the political environment of a country. This paper explores the impact that oil revenues have on the establishment of a given political system. Based on previous literature, a political economy perspective is employed. A simple game theoretical approach in order to explain the relationships between oil revenues, political instability (conflicts) and emergence of different political systems is presented. The implementation of particular redistributive fiscal policies together with the possibility that paternalistic or “predatory" autocracies emerge are considered. Under certain circumstances, a process of full democratization is argued not to represent an optimal choice for the oil-rich authoritarian nations. Since governments prefer to remain nondemocratic, in order to prevent internal conflicts from occurring, authoritarian countries have to undertake redistributive activities. Under other assumptions, governments of oil-rich nations prefer to introduce large military sectors. The present analysis determines how the emergence of redistributive of predatory policies depends on relevant parameters related to initial income, oil revenues and social inequality. Finally, we study the importance of socio-ethnical fragmentation in determining the political transition of oil producing nations.

Suggested Citation

  • Alessandro Cologni & Matteo Manera, 2012. "Oil Revenues, Ethnic Fragmentation and Political Transition of Authoritarian Regimes," Working Papers 2012.24, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2012.24
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    Keywords

    Natural Resources; Rentier States; Conflict and Endogenous Political Regimes;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • 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

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