Oil wealth and property rights

Indra De Soysa, Tim Krieger and Daniel Meierrieks

No 2020-03, Discussion Paper Series from University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy

Abstract: We empirically examine the impact of oil wealth on property rights protection for a sample of 156 countries between 1960 and 2014. We find that higher levels of oil wealth result in weaker private property rights. This result is robust to different instrumental-variable approaches and operationalizations of oil wealth and economic institutions. We argue that oil wealth creates an oil elite that wields disproportionate economic and political power over society. The elite uses this power to buy support for weak property rights from their supporters (the selectorate), while also punishing the opposition (i.e., the non-selectorate). Indeed, we also provide evidence that oil wealth leads to more clientelistic policies (benefitting the selectorate) but also more punitive measures (e.g., in the form of exclusion from state jobs) likely administered to the non-selectorate. We argue that the elite favors weak property rights because this blocks potential economic challengers, allowing for the consolidation and perpetuation of the economic and political status quo.

Keywords: oil wealth; economic institutions; property rights; resource curse; selectorate theory (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ene and nep-his
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Related works:
Working Paper: Oil Wealth and Property Rights (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wgspdp:202003

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