Resource wealth as rent leverage: Rethinking the oil–stability nexus

Abstract

The study of the “resource curse” has become a major research agenda with multiple outcomes of interest—regime type, regime stability, civil conflict and economic growth to name a few. However, the proliferation of different measurement choices has hamstrung the quest for knowledge accumulation. In this essay I present a new indicator for oil dependence—a concept I term rent leverage. It captures the share of individuals’ buying power that directly depends on fuel income and that nearly everywhere is controlled by political leaders. I use the new measure alongside fuel income per capita, to capture oil abundance, to explore the effects of oil wealth on political stability. Initial analysis of cross-national data from 1960 to 2009 suggests that rent leverage and fuel income strongly stabilize rulers of all types against regime change and that these effects are largely a function of cross-country differences. The stabilizing effects of oil income are significant but substantially smaller than rent leverage. The analysis further supports recent findings by Ross and Wright et al. that oil income and rent leverage both play stabilizing roles in autocracies, but that this effect is largely a cross-country one. Third, neither rent leverage nor oil income have any substantial or significant impact on civil war onset. Finally, contrary to both the weak state and coercion variants of resource curse theory, oil-producing countries appear to use less repression than others, and to have more durable regimes in part because of stronger states.