Resource Windfalls, Political Regimes, and Political Stability

Francesco Caselli () and Andrea Tesei

No 17601, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study theoretically and empirically whether natural resource windfalls affect political regimes. We document the following regularities. Natural resource windfalls have no effect on the political system when they occur in democracies. However, windfalls have significant political consequences in autocracies. In particular, when an autocratic country receives a positive shock to its flow of resource rents it responds by becoming even more autocratic. Furthermore, there is heterogeneity in the response of autocracies. In deeply entrenched autocracies the effect of windfalls on politics is virtually nil, while in moderately entrenched autocracies windfalls significantly exacerbate the autocratic nature of the political system. To frame the empirical work we present a simple model in which political incumbents choose the degree of political contestability by deciding how much to spend on vote-buying, bullying, or outright repression. Potential challengers decide whether or not to try to unseat the incumbent and replace him. The model uncovers a reason for the asymmetric impact of resource windfalls on democracies and autocracies, as well as the differential impact within autocratic regimes.

JEL-codes: E0 F0 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pol
Date: 2011-11
Note: EFG POL
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Related works:
Working Paper: Resource Windfalls, Political Regimes, and Political Stability (2011)
Working Paper: Resource Windfalls, Political Regimes, and Political Stability (2011)
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