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Does the patron-client connection between local governments and their superiors improve or hurt the local economic development? Although recent research suggests that patron-client connections boost local economic performance, this paper investigates the potential costs and risks of connection-driven economic development. With a difference-in-differences design applied to Chinese prefecture-level cities, I find that politically connected cities were more likely to win their superior's support to obtain the projects approved by the four-trillion-Yuan stimulus enacted in 2008 and increased the city's public investment in infrastructure. Meanwhile, these politically connected cities accumulated more public debts than other unconnected cities. Furthermore, those cities that lacked such political connections were more likely to promote private investment by introducing business-friendly policies. These results show that patron-client connections make an economic development model that features government investment and public debts more possible than the one that depends on vibrant entrepreneurship and private investment. [ABSTRACT FROM AUTHOR]

Research on the political implications of oil wealth is now over two decades old, and yet still unresolved. Despite many advances in this literature, a core concept—resource rents—remains under-theorized, and even less well measured. This mis-measurement, we contend, has direct and significant consequences for theoretical findings on the resource curse. Although rents refer to excessive profits, analyses to date have not directly or indirectly focused on the profitability of oil extraction; instead they rely more often on estimates of gross receipts or exports of natural resources. The largely untested assumption that oil sales consistently produce enormous profits has been the bridge used to treat these as measures of rents, even as the empirical foundations for this claim are shaky. In contrast, we measure the difficulty of oil production using data from over 3800 major oil fields around the globe between 1980 and 2012 to more accurately estimate the income generated by oil production and to calibrate its rent-generating potential using important correlates of its cost of production. The results show that where oil's cost of production is low, and its profitability high, pernicious regime outcomes are observed in keeping with resource curse claims. However, as production shifts to more challenging sources, oil production loses this association and may well at the extremes be associated with modestly more democratic outcomes. In other words, it is only "easy oil" that may be a curse for democratic development. [ABSTRACT FROM AUTHOR]

While some resource-rich countries are highly corrupt, others have transparent and well-functioning governments. What explains this wide variation in so-called "resource-cursed" states? I show that these differences result from domestic institutional choices over how resource extraction is governed. Some governments grant procurement authority—the ability to award contracts for production rights—to state-owned enterprises, whereas others place this authority in ministries. Building upon agency theory, I argue that this choice matters: The relative political autonomy of state-owned enterprises compared with ministries fosters an opaque regulatory environment that incentivizes malfeasance. Using new data on transnational bribes in 59 oil-producing countries, I show evidence for a robust link between oil-related institutions and bribery, even after addressing the endogeneity of institutional choice via instrumental variables analysis. This research has implications not only for the political economy of the resource curse hypothesis but also for existing theories on corruption and regulatory independence. [ABSTRACT FROM AUTHOR]

Recent studies on the subnational resource curse contend that subnational rentier units suffer from the same nondemocratic tendency as their national counterparts. However, subnational rentier states worldwide exhibit contrasting political outcomes. Why are some subnational rentier units politically competitive whereas others are not? This article argues that rent-sharing regimes—the fiscal institutions for sharing resource revenues among levels of government—condition political competitiveness at the provincial level. Using novel time-series cross-sectional data on Argentina, a case with several hydrocarbon-rich units with exogenously created rent-sharing regimes, I show that oil creates negative political effects at the provincial level only when these institutions do not share—or share minor amounts of—rents with municipal governments. Conversely, political competition emerges when rent-sharing regimes distribute rents to municipal governments, as this shrinks large provincial budgets, allows municipalities to deliver public and private goods, and gives municipal politicians fiscal independence from provincial governments. [ABSTRACT FROM AUTHOR]

Is there a resource curse? Some scholars argue that resource income is associated with slower transitions to democracy; others contend that the negative effects of resources are conditional on factors such as institutional quality. To test these competing hypotheses, this article exploits the price spike caused by the 1973 oil embargo, which transformed several countries with latent oil industries into resource-reliant states. Our quasi-experimental research design allows for better identification of causation than the associational approaches common in the literature. We use the method of synthetic controls to compare the political development of states that received resource-derived revenue with how these states would have behaved in a counterfactual world without such revenue. We find that there is little evidence that a resource curse systematically prevents democratization or that institutional quality alone determines outcomes. Nevertheless, resource income meaningfully affects outcomes and even contributes to democratization in some instances. [ABSTRACT FROM PUBLISHER]

A considerable debate precludes drawing conclusions about oil’s effect on democracy. This article challenges this stalemate by significantly expanding the scope of the previous research and using meta-regression analysis to examine the integrated results of extant scholarship. While the results suggest a nontrivial negative association between oil and democracy across the globe, they also indicate a notable variation in this relationship across world regions and institutional contexts. A conditioning effect of institutions may lie more in a broader set of economic and political institutions, less so in previous political regime, but not in institutions associated with British colonial past. Finally, while oil does not seem to impede democracy by retarding two key channels of modernization—income and urbanization—it may have an indirect negative effect on democracy through its adverse impact on education. [ABSTRACT FROM PUBLISHER]

The claim that oil wealth tends to block democratic transitions has recently been challenged by Haber and Menaldo, who use historical data going back to 1800 and conclude there is no “resource curse.” We revisit their data and models, and show they might be correct for the period before the 1970s, but since about 1980, there has been a pronounced resource curse. We argue that oil wealth only became a hindrance to democratic transitions after the transformative events of the 1970s, which enabled developing country governments to capture the oil rents that were previously siphoned off by foreign-owned firms. We also explain why the Haber–Menaldo study failed to identify this: partly because the authors draw invalid inferences from their data and partly because they assume that the relationship between oil wealth and democracy has not changed for the past 200 years. [ABSTRACT FROM PUBLISHER]

Why do many resource-rich countries maintain autocratic political regimes? The authors’ proposed answer focuses on the causal effect of labor imports, or immigration. Using the logic offered by Acemoglu and Robinson’s democratization model, the authors posit that immigration makes democratization less likely because it facilitates redistributive concessions to appease the population within an autocratic regime. This immigration argument applies directly to the political resource curse since many resource-rich countries tend to also be labor scarce, leading them to import foreign laborers. Consistent with this understanding, the authors find a statistically significant negative relationship between net immigration per capita and democratization in future periods. Their results also show that when controlling for this immigration effect, the standard resource curse variables lose significance in a democratization model. This latter result suggests that much of the so-called resource curse stems not from resource endowments per se but rather from the labor imports related to resource production. [ABSTRACT FROM PUBLISHER]

Much political science scholarship, including important work in this journal, has explored the implications of natural resource endowments— particularly oil and other highly valuable export commodities—on political and economic outcomes. Although the first wave of literature emphasized the negative effects of these resources, more recent work emphasizes how domestic institutions can condition the relationship, sometimes leading to positive effects. In this special issue, the authors expand this literature in two important ways. First, they renew attention on the international dimensions of this relationship, exploring how trade, migration, foreign investment, and other global forces influence the effects these resources have on countries. Second, they link the study of the globalization—natural resources nexus to broader debates in international and comparative political economy, such as how domestic institutions shape the impact of globalization and how economic factors affect the political survival of regimes and individual leaders. The five studies in this collection use a variety of research methodologies (formal models, country case studies, and large-N empirical analyses) to examine several different international economic factors linking resources with politics. The findings provide new insights into the politics of natural resources, expand the traditional focus of the resource curse literature to include other natural resources (e.g., water), and shed light on whether globalization has the ability to improve natural resource governance around the world. [ABSTRACT FROM PUBLISHER]

Since the 1990s it has become conventional wisdom that an abundance of natural resources, most notably oil, is very likely to become a developmental “curse.” Recent scholarship, however, has begun to call into question this apparent consensus, drawing attention to the situations in which quite the opposite result appears to hold, namely, where resources become a developmental “blessing.” Research in this vein focuses predominantly on the domestic political and economic institutions that condition the growth effects of natural resource wealth. Less attention, however, has been paid to whether or how the context of economic integration has conditioned the domestic political economy of natural resource development. This article specifically addresses this theoretical disjuncture by arguing first that the developmental consequences of oil wealth are strongly conditioned by domestic human capital resources, which, where sizeable, make possible the management of resources in ways that encourage the absorption of technology and development of valuable new economic sectors. In the absence of robust human capital formation, however, the archetypal “resource curse” is likely to result. The authors argue moreover that international economic integration further amplifies the divergence between these outcomes by simultaneously raising the growth-enhancing effects of large stocks of human capital and by directly facilitating economic growth. Analysis of global data on growth and oil abundance (1979-2007) supports their main hypotheses that natural resource wealth can be either a “curse” or a “blessing” and that the distinction is conditioned by domestic and international factors, both amenable to change through public policy, namely, human capital formation and economic openness. [ABSTRACT FROM PUBLISHER]

There is a growing literature on how natural resources affect both economic performance and political regimes. In this article the authors add to this literature by focusing on how natural resource wealth affects the incentives of governments to uphold contracts with foreign investors across all sectors. They argue that although all states suffer reputation costs from reneging on contracts, governments in natural-resource-dependent economies are less sensitive to these costs, leading to a greater probability of expropriation and contract disputes. Specifically, leaders weigh the benefits of reneging on contracts with investors against the reputation costs of openly violating agreements with firms. The authors’ theoretical model predicts a positive association between resource wealth and expropriation. Using a data set from the political risk insurance industry, the authors show that resource dependent economies have much higher levels of political risk. [ABSTRACT FROM PUBLISHER]

The work linking natural resource wealth to authoritarianism and under- development suffers from several shortcomings. In this article, the authors outline those shortcomings and address them in a new empirical setting. Using a new data set for the U.S. states spanning 73 years and case studies of Texas and Louisiana, the authors are able to more carefully examine both the diachronic nature and comparative legs of the resource curse hypothesis than previous research has. They provide evidence that natural resource dependence contributes to slower economic growth, poorer developmental performance, and less competitive politics. Using this empirical setting, they also begin parsing the mechanisms that might explain the negative association between resource wealth and political and economic development. They draw implications from intranational findings for resource abundant countries across the world and suggest directions for future cross-national and cross-state work. [ABSTRACT FROM AUTHOR]

Political economists point to the levels of economic development, poverty, and income inequality as the most important determinants of political regimes. The authors present empirical evidence suggesting a robust and negative correlation between the presence of a sizable natural resource sector and the level of democracy in Africa. They argue that resource abundance not only is an important determinant of democratic transition but also partially determines the success of democratic consolidation in Africa. The results illuminate the fact that post--Cold War democratic reforms have been successful only in resource-poor countries such as Benin, Mali, and Madagascar. The authors argue that resource-rich countries such as Nigeria and Gabon can become democratic only if they introduce strong mechanisms of vertical and horizontal accountability within the state. [ABSTRACT FROM AUTHOR]