Africa and the New Rentier Effect: Oil, Aid, Regime-Type

Scholars of European state formation have long underlined the connection between taxation and political development, noting that revenue collection can promote institution-building and accountability. This argument goes back at least to Joseph Schumpeter (1918) who spoke of the “tax state,” describing how a country’s tax system shapes the relationship between a state and its citizenry. But scholars of the post-colonial world observe that the process of state formation in Europe occurred in a specific context; whereas state-building in the contemporary era occurs in a context where there is an abundance of natural resources and strategic rents at the international level, which rulers can access. Different theoretical tools are therefore required to understand political development in the non-West. The diffusion of rents at the international level and its effect on state structures would give rise to “rentier state theory,” introduced by economist Hussein Madhavy in 1970, to understand the political economy of Iran specifically, but more generally of states that derive a substantial part of their national revenue from the “rent” of local resources to external actors. Giacomo Luciani and Hazem Al Beblawi would elaborate on this thesis adding that rentier states also lack a strong domestic productive sector, and that only a small segment of their labor force is employed in the generation of the rent.