Testing the Neocon Agenda: Democracy in Resource-Rich Societies.

Journal article

Resource-rich countries have tended to be autocratic and also have tended to use their resource wealth badly. The neoconservative agenda of promoting democratization in resource-rich countries thus offers the hopeful prospect of a better use of their economic opportunities. This paper examines whether the effect of democracy on economic performance is distinctive in resource-rich societies. We show that a priori the sign of the effect is ambiguous: Resource rents could either enhance or undermine the economic consequences of democracy. We therefore investigate the issue empirically. We first build a new dataset on country-specific resource rents, annually for the period 1970–2001. Using a global panel dataset, we find that in developing countries the combination of high natural resource rents and open democratic systems has been growth-reducing. Checks and balances offset this adverse effect. Thus, resource-rich economies need a distinctive form of democracy with particularly strong checks and balances. Unfortunately, this is rare: Checks and balances are public goods and so are liable to be undersupplied in new democracies. Over time they are eroded by resource rents.

Authors: Collier, P; Hoeffler, A

• Publication status: Published
• Peer review status: Not peer reviewed
• Publisher: Elsevier
• Journal: European Economic Review
• Volume: 53
• Issue: 3
• Pages: 293 - 308
• Publication date: 2009-04-01
• DOI: 10.1016/j.euroecorev.2008.05.006
• ISSN: 0014-2921
• Language: English