Diamonds are a Dictatorʼs Best Friend: Natural Resources and the Tradeoff between Authoritarianism and Development
36 Pages Posted: 25 Jan 2010
Date Written: April 2009
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: Suggested Citation