Oil Rents, Corruption, and State Stability: Evidence from Panel Data Regressions

Rabah Arezki and Markus Brückner

No 2011-07, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

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 30 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.

Keywords: oil rents; corruption; state stability; state participation (search for similar items in EconPapers)
JEL-codes: C33 D72 D73 D74 H21 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2011-01
New Economics Papers: this item is included in nep-ara, nep-cwa, nep-ene and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (154)

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Journal Article: Oil rents, corruption, and state stability: Evidence from panel data regressions (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:2011-07

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