Oil and Political Freedom in Third World Petro States: Do Oil Prices and Dependence on Petroleum Exports Foster Authoritarianism?

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INTRODUCTION

Why are so many oil-rich states so frequently undemocratic? Is there a link between an oil-rich state's reliance on natural resource exports as the primary source of government revenue and autocracy? Interest in this topic is in large measure due the persistence of despotism in the oil-rich Middle East. At first glance, there appears to be some degree of correlation. For instance, amongst all the oil-rich states that depend on oil exports for at least 25 percent of their total annual revenue, only Norway is a genuinely functioning democracy. Whereas Mexico and Indonesia have maintained an electoral democracy with some degree of success over the years, the vast majority of oil export-dependent countries have been unable to translate vast oil resources and revenue into either democratization or sustainable economic growth. Regarding economic development and growth in Gross Domestic Product, several authoritative studies have demonstrated an inverse relationship between natural resource export dependence and sustained economic growth. For instance, Jeffrey D. Sachs and Andrew M. Warner conducted a study of 97 countries over a 19-year period, and found that high ratios of natural resource exports to GDP effectively translated into markedly slower rates of economic growth. (1) Several other studies have arrived at similar conclusions. (2) To be sure, as the experiences of Botswana and Norway indicate, natural resource abundance does not drive down economic growth in a linear, deterministic fashion. (3) Rather, the booming oil section potentially discourages investment in ... agricultural and manufacturing exports by raising their prices on international markets". (4) To make matters worse, oil revenue funds monopolies, crowds out entrepreneurship, and increases corruption. The consensus is that in relatively large samples, "higher natural resource dependency is associated with lower economic growth." (5)

In contrast to the issue of economic growth, the empirical data concerning the linkages between natural resources' export dependence and authoritarianism, often referred to as the "resource curse," is not well-established and is subject to debate. (6) In particular, there is a void in the literature regarding the impact of natural resources' price changes, petroleum in particular, and the relative validity of the resource curse hypothesis. (7)

In this study, we will focus on democratic rights and civil liberties in oil-rich states whose economies are most reliant on petroleum exports. Accordingly, the study will address the following key questions: (1) Are governments highly dependent on revenue from the export of oil less likely to embrace political freedoms? If so, has this always been the case?; (2) To what extent do significant changes in oil prices translate into decreased levels of political freedom in such states? The second question is especially important because it points to a dynamic perspective on the relationship between natural resource prices over time and governments' degree of receptivity (or lack thereof) to political freedom. Indeed, most studies on the subject tend to take a snapshot of the resource curse at certain crucial periods. Yet, the prices of natural resources fluctuate dramatically over time. Unless we account for such fluctuations and their subsequent impact on the pace of democratization, a resource curse study of this kind is likely to be incomplete. Thus, a gap exists in the resource curse literature, and we hope to offer preliminary insights to help fill this void. (8) A study of this type is especially warranted because of the dramatic fluctuations in the price of oil and concomitant political changes and. in some instances, upheavals, in oil rich Third World countries, the Middle East in particular. As such this study will help fill a void in the literature.

Specifically, this study will track changes in the price of oil over a significant period of time, pinpoint major oil price swings, and relate these price swings to changes in the level of political freedoms, thereby shedding light on whether changes in oil prices affect political liberalization. …

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