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Oil Rents, Corruption, and State Stability - Evidence From Panel Data Regressions

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  • International Monetary Fund

Abstract

We examine the effects of oil rents on corruption and state stability exploiting the exogenous within-country variation of a new measure of oil rents for a panel of 31 oil-exporting countries during the period 1992 to 2005. We find that an increase in oil rents significantly increases corruption, significantly deteriorates political rights while at the same time leading to a significant improvement in civil liberties. We argue that these findings can be explained by the political elite having an incentive to extend civil liberties but reduce political rights in the presence of oil windfalls to evade redistribution and conflict. We support our argument documenting that there is a significant effect of oil rents on corruption in countries with a high share of state participation in oil production while no such link exists in countries where state participation in oil production is low.

Suggested Citation

  • International Monetary Fund, 2009. "Oil Rents, Corruption, and State Stability - Evidence From Panel Data Regressions," IMF Working Papers 2009/267, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2009/267
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    Cited by:

    1. Yin‐Wong Cheung & Jakob de Haan & Xingwang Qian & Shu Yu, 2012. "China's Outward Direct Investment in Africa," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 201-220, May.
    2. Wegenast, Tim, 2013. "The Impact of Fuel Ownership on Intrastate Violence," GIGA Working Papers 225, GIGA German Institute of Global and Area Studies.
    3. Rabah Arezki & Thorvaldur Gylfason, 2011. "Resource Rents, Democracy and Corruption: Evidence from Sub-Saharan Africa," CESifo Working Paper Series 3575, CESifo.
    4. Frankel, Jeffrey A., 2010. "The Natural Resource Curse: A Survey," Scholarly Articles 4454156, Harvard Kennedy School of Government.
    5. Frankel, Jeffrey A., 2012. "The Natural Resource Curse: A Survey of Diagnoses and Some Prescriptions," Scholarly Articles 8694932, Harvard Kennedy School of Government.
    6. Troug, Haytem & Murray, Matt, 2015. "The Effects of Asymmetric Shocks in Oil Prices on the Performance of the Libyan Economy," MPRA Paper 68705, University Library of Munich, Germany.

    More about this item

    Keywords

    WP; oil rent; rent; country; effect;
    All these keywords.

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