Working Paper: CEPR ID: DP11136
Authors: Maria Carreri; Oeindrila Dube
Abstract: Do natural resources impair institutional outcomes? Existing work studies how natural resources influence the behavior of leaders in power. We study how they influence leaders' rise to power. Our analysis focuses on oil price shocks and local democracy in Colombia, a country mired in civil conflict. We find that when the price of oil rises, legislators affiliated with right-wing paramilitary groups win office more in oil-producing municipalities. Consistent with the use of force to gain power, positive price shocks also induce an increase in paramilitary violence, and reduce electoral competition: fewer candidates run for office, and winners are elected with a wider vote margin. Ultimately, fewer centrist legislators are elected to office, and there is diminished representation at the center. Our findings highlight how natural resources undermine democracy by distorting elections, and suggest that conflict leaves the political sector vulnerable to the resource curse.
Keywords: natural resources; elections; democracy; leaders; conflict
JEL Codes: D72; H11; H70; O12; O13; Q34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Rising oil prices (Q31) | Increase in election of pro-paramilitary legislators (K16) |
| Rising oil prices (Q31) | Decrease in electoral competition (K16) |
| Decrease in electoral competition (K16) | Increase in vote margin of winning candidates (K16) |
| Positive oil price shocks (Q43) | Heightened paramilitary violence (H56) |
| Heightened paramilitary violence (H56) | Intimidation of opposition candidates and voters (K16) |
| Rising oil prices (Q31) | Decrease in centrist representation (D79) |