Resource Rents, Power, and Political Stability

21 Pages Posted: 25 Apr 2014

See all articles by Kjetil Bjorvatn

Kjetil Bjorvatn

Norwegian School of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute)

Mohammad Reza Farzanegan

University of Marburg - Center for Near and Middle Eastern Studies (CNMS)

Date Written: March 24, 2014

Abstract

We study the association between resource rents and political stability, highlighting the importance of the distribution of political power as a mediating factor. We present a simple theoretical model showing that increased rents are likely to be positively associated with the stability of a powerful incumbent while destabilizing a less powerful incumbent. Our empirical analysis confirms this prediction: Using panel data for more than 120 countries from 1984-2009, our results show that rents can promote political stability, but only when the political power is sufficiently concentrated. Indeed, if the incumbent is sufficiently weak, rents fuel instability. Our main results hold when we control for time varying common shocks, country fixed effects and various additional covariates.

Keywords: resource rent, political power, political stability, conflict

JEL Classification: A100, C500, E600, O110, O200, Q300, Q480

Suggested Citation

Bjorvatn, Kjetil and Farzanegan, Mohammad Reza, Resource Rents, Power, and Political Stability (March 24, 2014). CESifo Working Paper Series No. 4727, Available at SSRN: https://ssrn.com/abstract=2428620

Kjetil Bjorvatn

Norwegian School of Economics and Business Administration ( email )

Helleveien 30
N-5035 Bergen
Norway
47-55 9595 85 (Phone)
47-55 9595 43 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Mohammad Reza Farzanegan (Contact Author)

University of Marburg - Center for Near and Middle Eastern Studies (CNMS) ( email )

Deutschhausstra├če 12
Marburg, 35037
Germany

HOME PAGE: http://www.uni-marburg.de/cnms/wirtschaft

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