Working Paper: CEPR ID: DP8662
Authors: Francesco Caselli; Andrea Tesei
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.
Keywords: Natural Resources; Political Regimes; Autocracy; Democracy; Political Stability
JEL Codes: O13; O43; D72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| natural resource windfalls (Q33) | political regimes (P16) |
| natural resource windfalls (Q33) | autocracy (D73) |
| positive shock to resource rents (Q33) | increase in autocracy (D73) |
| resource windfalls (Q33) | political repression efforts (P37) |
| deeply entrenched autocracies (O17) | negligible effects from windfalls (G59) |
| moderately entrenched autocracies (O17) | significant exacerbation of autocratic tendencies (D73) |