Bad Wealth - Retesting th Relationship between Natural Resource Abundance and Democracy

Abstract

How does natural resource abundance influence state and society? Since the late 1980s, a number of scholars have confronted the widespread predisposition to view resources overly optimistically, as a blessing. They claim instead that resources are in fact a curse that affects economical, as well as social and political institutions in a decidedly negative manner. The aim of this paper is to retest the negative correlation between resource abundance and democracy presented by Michael L. Ross in his article Does Oil Hinder Democracy? from 2001. This is done with an arguably improved measure of natural resource wealth, based on rents, not sales value. In line with Ross, I use a cross-sectional time-series data set where observations from all sovereign states are compiled over thirty-five years, and analyze them using a feasible generalized least squares method. The results reinforce Ross’ main conclusion that oil wealth harms democracy and that this effect is valid all over the globe. His claim that this property is shared by hard mineral wealth receives only mixed support, however. On the whole, these findings serve to strenghten the notion of a curse of natural resources and further advances the generality of this theory.