Resource Rents, Democracy and Corruption: Evidence from Sub-Saharan Africa

18 Pages Posted: 21 Sep 2011

See all articles by Rabah Arezki

Rabah Arezki

World Bank - African Development Bank

Thorvaldur Gylfason

University of Iceland - Faculty of Economics and Business Administration; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: September 21, 2011

Abstract

We examine the effect of the interaction between resource rents and democracy on corruption for a panel of 29 Sub-Saharan countries during the period from 1985 to 2007. We find that higher resource rents lead to more corruption and that the effect is significantly stronger in less democratic countries. Surprisingly, we also find that higher resource rents lead to fewer internal conflicts and that less democratic countries face not a higher but a lower likelihood of conflicts following an increase in resource rents. We argue that these findings can be explained by the ability of the political elites in less democratic countries to more effectively quell the masses through redistribution of rents to the public. We support our argument by documenting that higher resource rents lead to more (less) government spending in less (more) democratic countries. Our findings suggest that the mechanisms through which resource rents affect corruption cannot be separated from political systems.

Keywords: resource rents, corruption, political systems, internal conflicts

JEL Classification: C330, D730, D740, D720, H210

Suggested Citation

Arezki, Rabah and Gylfason, Thorvaldur, Resource Rents, Democracy and Corruption: Evidence from Sub-Saharan Africa (September 21, 2011). CESifo Working Paper Series No. 3575, Available at SSRN: https://ssrn.com/abstract=1931491 or http://dx.doi.org/10.2139/ssrn.1931491

Rabah Arezki

World Bank - African Development Bank ( email )

15 Avenue du Ghana
P.O.Box 323-1002
Tunis-Belvedère
Tunisia

Thorvaldur Gylfason (Contact Author)

University of Iceland - Faculty of Economics and Business Administration ( email )

IS-101 Reykjavik
Iceland
+354 525 4533/00 (Phone)
+354 552 6806 (Fax)

HOME PAGE: http://www.hi.is/~gylfason/inenglish.htm)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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