Revisiting the oil curse: are oil rich nations really doomed to autocracy and inequality?
There is an adage about wealth and democracy that says “the more well-to-do a nation, the greater the chances it will sustain democracy.” Accordingly, one would expect that nations rich in natural resources, and particularly those with large deposits of oil – a clear absolute advantage – would shine far beyond all others as beacons of democracy and freedom. Unfortunately, nothing seems further from the truth. Studies undoubtedly show that oil dependence leads to a skewing of political forces. It concentrates production to geographic enclaves and concentrates power into the hands of a few elites. It becomes a fisherman’s market for rent-seeking behavior, where those with money jockey for positions and influence to acquire lucrative contracts, the revenues from which are used to further bribe and manipulate those in power. Consequently, those in power secure the positions of their benefactors, creating a vicious circle of corruption and patronage, secured from open inspection of a free press, public accountability, or standards of international business and political practice. They tend to have stratified social classes with a tiny minority earning millions while a vast portion of the population wallow in abject poverty. How is it possible to be so rich, yet so poor? Is this phenomenon, known as the “oil curse,” or in social science parlance, the “resource curse” truly to blame? Does oil really impede democracy and economic growth? “Revisiting the oil curse: are oil rich nations really doomed to autocracy and inequality?” addresses precisely these questions, and the answers are no less than disturbing.
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- Michael Alexeev & Robert Conrad, 2009. "The Elusive Curse of Oil," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 586-598, August.
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