Diamonds are a Dictatorʼs Best Friend: Natural Resources and the Tradeoff between Authoritarianism and Development

36 Pages Posted: 25 Jan 2010

See all articles by Omar Al-Ubaydli

Omar Al-Ubaydli

George Mason University - Department of Economics; Derasat; George Mason University - Mercatus Center

Date Written: April 2009

Abstract

Why do African and Middle Eastern countries seem cursed by an abundance of natural resources yet USA, Australia and Norway seem blessed? A growing literature has argued that the benevolence or malignance of natural resources depends upon the quality of institutions. This paper offers a new explanation based on associational freedom and its interaction with the political system. The model predicts that natural resources have an adverse impact on economic performance and transition to democracy in authoritarian regimes but not in democracies. It also predicts that repression of associational freedom will be increasing in natural resources in authoritarian regimes. I test the model’s predictions using fixed-effects regressions on an international panel from 1975-2000 and find some support.

Keywords: development, natural resources, authoritarianism, democratization

JEL Classification: O13, D7

Suggested Citation

Al-Ubaydli, Omar, Diamonds are a Dictatorʼs Best Friend: Natural Resources and the Tradeoff between Authoritarianism and Development (April 2009). GMU Working Paper in Economics No. 10-03, Available at SSRN: https://ssrn.com/abstract=1542179 or http://dx.doi.org/10.2139/ssrn.1542179

Omar Al-Ubaydli (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-4538 (Phone)
703-993-1133 (Fax)

Derasat ( email )

Bahrain

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

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