From Rents to Welfare: Why Are Some Oil-Rich States Generous to Their People?

Ferdinand Eibl and Steffen Hertog

American Political Science Review, 2024, vol. 118, issue 3, 1324-1343

Abstract: Why do some, but not all oil-rich states provide generous welfare to their populations? Building on a case study of Oman in the 1960s and 1970s, we argue that anti-systemic subversive threats motivate ruling elites in oil states to use welfare as a tool of mass co-optation. We use the generalized synthetic control method and difference-in-difference regressions for a global quantitative test of our argument, assessing the effect of different types of subversion on a range of long-term welfare outcomes in oil-rich and oil-poor states. We demonstrate that the positive effect of subversion appears limited to center-seeking subversive threats in oil-rich countries. The paper addresses a key puzzle in the literature on resource-rich states, which makes contradictory predictions about the impact of resource rents on welfare provision.

Date: 2024
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